The Market Audit And Preliminary Marketing Plan Marketing Essay

Published Date: 23 Mar 2015

The market audit and preliminary marketing plan is prepared to inspect lunching the SOLO in Afghanistan. It has been based on the market analysis such as socio-cultural and economic analysis of Afghanistan and also, determines how to stable to launch the SOLO product, which is target market and how to be adapted to fit into Afghanistan market as well as determine the competitors. Based on this analysis, preliminary marketing plan has been prepared to determine the marketing mix.

Firstly, the product, SOLO is a brand of a carbonated lemon-flavored soft drink. Sports drink is necessary in Afghanistan where dry desert are. The product may be accepted by some kinds of people, including young Afghans who have been affected by western culture, the foreign workers and the members of international military which stationed in Afghanistan. Solo as a new health soft drink will be known and chose.

This soft drink (SOLO) will be sold in capital area at first. In this area, not only the people have stronger purchasing power, but also there are many foreign officers and businessmen working and living in capital area. In addition, this product will start out in the region of stress concentration of foreign companies, hotels, bars, famous restaurants then move to local retailers.

This product will also be sold by other middlemen. Roshan Cola Company is a local Mineral Water and Carbonated Soft Drink manufacturer. We will corporation with Roshan then our product can use its marketing channels and share the market range.

The competition of Afghanistan's beverage market is not intense competition and our product can own a large market in Afghanistan, but still got many competitors such as Coca-Cola.

The goal for SOLO is to entry into the Afghan several main cities, around capital city- Kabul to successfully enter the Afghan market, to achieve a 10% market share within the first step and to promote to a large consumer a taste of this product (Soft drink not only cola).This product will attract new customers (Foreigners and locals) for the soft drink.

The target markets are the hot summertime cities and arid conditions, where Afghan people indicate a huge market for clean and refreshing non-alcoholic beverages (Non-drinker for religious reasons).

Expected sales in 2010 will be approximately AU$ 80 million with increases expected. The first year is the repair year, due to the highest cost associated with setting up the requirements. Follow the sales operating and distribution systems start to work, in the following years, the profit expectations will be higher step by step.

The product will be adapted to fit the market in Afghanistan. These adaptations include the packaging, bottling size, color and so on. We will sell paper cup and glass packaging in Afghanistan that does not sell in Australia to reduce cost and keep the price low.

Advertising will be the first show in a new market and also the first choice for a company to communicate with potential customers. The main advertising plan is to use television, radio, internet, newspapers and billboards. The other way of TV advertisements is in a form of product placement. In addition, we will use two types of sales promotion which are trade sales promotion and consumer sales promotion. Moreover, we also use personal selling method and other promotional tools.

Distribution will include transportation by shipping, flight and motor carrying from Perth to Kabul. The product will be sold in the outlet of Roshan Cola Company and variety of other retail outlets which is a local agent who is familiar with local conditions is very necessary to sales in Afghanistan such as hotels/ resorts, restaurants, convenience store and vending machine.

Finally, pro forma financial statements and budget has been prepared to demonstrate its evaluated profits and sales with expenses in the first year to the fifth year. Profit expectation will be lower in the first year due to the highest costs with additional resources for set up. Over five years, profit and sales will significantly increase with reducing distribution costs.

As a result, the launch of SOLO into the Afghanistan market has to be successful with better profit for the SOLO Company.

Market Audit

Introduction

Following is the afghan socio-cultural and economic analysis. It may be helpful to solo entering the afghan market successfully.

Socio-cultural analysis

-Geography: Afghanistan is an inland country in Southwestern and borders with Pakistan, Tajikistan, Iran, Turkmenistan, Uzbekistan and China. It is dry to semiarid and cold in winter and hot in summer (Afghanistan's web site [ACC], n.d.). Plateau and mountainous make up 2/3 of 647,500 sq km land. Moreover, there is a wide range of desert in this country (Saba & Bakhter, 1997).

-Education & literacy rates: Afghans valued religious education instead of science, technology and literature studies in the past. At present, 54 thousand children are studying in school. However, there have been 11 million illiterates in Afghanistan (Qazi, 2008).

-Health care: According to Blood (2001), there is a high mortality rate of infants and pregnant women. Moreover, the health of afghan children is threatened by the several of infectious and parasitic diseases. And still worse, the long war leads to the thousands of injuries and damages of medical facilities. On the other hand, many international organizations help Afghans improve the basic preventive and curative primary health services.

-Political & legal system: Afghanistan is an Islamic Republic, and the major constitution is established according to Islamic law. However, there is not a uniform legal system in Afghanistan because of the long war. (Lau, n.d.).

-Language: Pashto and Dari are the major official languages of Afghanistan. In Afghanistan, 35% of people speak Pashto and 50% of people speak Dari. Moreover, Turkic languages, including Uzbek and Turkmen, are the main languages too in Afghanistan (Qazi, n.d.).

Economic analysis

-Population: An estimated data of the population of Afghanistan in 2003 is 23,897,000 and the annual growth rate of Afghan population is 3.88% between 2000 and 2005. However, these data is unsure because the long civil war leads to the large numbers of death and emigrants ("Afghanistan-Population", n.d.).

-Gross domestic product: Agriculture is the main revenue source. A large amount of food products, including corn, rice, barley, wheat, vegetables, fruits and nuts, offer the opportunities of export. In addition, the natural mineral has been the main economic pillar industries (Qazi, 2010).

-Foreign investment: In present, only some companies are investing public transport and infrastructure, such as telecommunications, express delivery and aviation, because of the long war in Afghanistan (Herold, 2003).

On the other hand, a trillion dollars worth of minerals, including copper, iron, chromium, magnesium, rubies, emeralds, lapis lazuli, nickel, mercury, gold, silver, lithium, and uranium, are found in Afghanistan in June 2010. In addition, many countries have been aware of the opportunity of investment in Afghanistan. (Haidari, 2010).

-Trade restrictions: A highly differentiated import tariff regime has been the main trade restrictions in Afghanistan. Though the government of Afghanistan has made some measures, such as adjusting the tariff rates and decreasing the process of the import license applications, to improve trade policy and customs administration in recent years, some problems are affecting the trades: firstly, the shortcoming of government leads to the weakness of business environment; secondly, transport and other infrastructural constraint the trade; thirdly, the main support services, such as commercial insurance and freight forwarding are lacking; fourthly, government restraint against the use of foreign trucks; fifthly, the local authorities increase the fee of transport; and finally, some complex customs checks are frequently in some problematic border areas ("Afghanistan: Trade Policy and Integration", 2010).

The product

Solo is a brand of a carbonated lemon-flavored soft drink. Schweppes Australia launched this soft drink as a sports drink in 1973. Schweppes Australia defines it as masculine drink and cooperates with AFL (Australia Football League) perennially. Moreover, it has had 6 variants: Regular Lemon, Lemon & Lime, Solo Sub (no added sugar), Solo Strong, guarana and caffeine ("Solo (soft drink), n.d.").

Evaluation the product as an innovation

Sports drink is necessary in Afghanistan where dry desert are. The product may be accepted by some kinds of people, including young Afghans who have been affected by western culture, the foreign workers and the members of international military which stationed in Afghanistan. Solo as a new health soft drink will be known and chose.

Advantage

Solo could help drinkers replenish lost water and energy after a lot of movement. It is health because the materials of solo are all natural and it do not include too much cocaine. In addition, different flavors of solo drinks are for different people and the cheaper price is the main reason of the choice of many people.

Relative advantage

Firstly, solo as a sports drink will be liked by the young Afghans who like sports. Moreover, it is a good choice for the workers in desert. Furthermore, the product from Australia should attract the international garrison, especially Australian soldiers. In addition, it is beneficial to Afghan government because import of solo could relieve water shortage.

Compatibility

Firstly, the sport enthusiasts and soldiers could accept solo quickly. Moreover, Afghanistan is a large drink market because of the lack of water. In addition, Coca-Cola and Pepsi have been known by Afghans and the soft drink market has been developing gradually. As a result, solo will have a favorable market prospect in Afghanistan.

Major problems and resistances to product

The flavor with little sour may be not liked by Afghans. Because of the different culture, Afghans might reject the products from western. As a result, Afghans could not accept the new comer western drink at the beginning.

The price of solo might be not accepted by most of Afghans who have only low income. As a result, it becomes very important that company need to discuss with Afghan government to reduce the costs of transport and tariff.

The market

This soft drink (SOLO) will be sold in capital area at first. In this area, not only the people have stronger purchasing power, but also there are many foreign officers and businessmen working and living in capital area. According to Afghan economy position and internal transportation condition, this will slowly move into the general population in Afghanistan.

Describe the market(s) in which the product is to be sold

This soft drink will be served in Afghanistan capital area (tropical area and dry) where have more and more foreign officers and international businessmen entry Afghanistan, to implement post-war reconstruction and partake The UN economic aid program.

Geographical region(s)

-Capital city: Kabul (200, 0000 populations)

-Paghman region: Paghman (15, 0000 populations)

-Jalalabad region: Jalalabad (20, 5000 populations)

Kabul province is made up of 14 districts; Paghman is a part of it. Jalalabad is a main city in Afghanistan

Form of transportation and communication available in that region

-In Kabul city: There is the nation biggest international airport in Kabul. The airport is connected to Kabul from a 4 lane highway. This airport has two main cargo airline operate by Emirates Sky Cargo and Etihad Crystal Cargo (operated by World Airways), communicate among Afghanistan, Dubai, Abu Dhabi and Sharjah. Follow by the post-war reconstruction; throughput will be expanded in 2011, which is when Ariana Afghan Airlines and Kam Air will receive their new airplanes. Trucks are the best choice to transport goods from airport to another district, or to the other cities of this area. In several years, Afghan government, with the help of foreign companies or organizations, has working on many of Kabul's roads. During the war, many Kabul's roads have been broken, but follow the attracted the attention of international society, Kabul gets more and more help from many countries to rebuild the highways and main roads in Kabul city. (xpatulator.com)

-Paghman region: There is a popular place near Kabul, Paghman garden is the very famous place where people relax and spend weekends with families and friends. Paghman is a village used to be a royal garden. But now is open to the public. Because this area is so close to the Kabul city and also there is a holiday resort and beauty spot. The transportation is convenient; trucks can though this area and the roads condition can be accepted.

-Jalalabad region: There is a very important place in Afghanistan, there is connected by roads with Kabul and Peshawar in Pakistan. There has highway between the city of Jalalabad and Kabul. All the trade between the two nations (Afghanistan and Pakistan) passes through this city. Highway transportation will be served in this area.

All of the regions have highways linking the Kabul International Airport. Follow post-war reconstruction, get more and more help from developed countries to improve and maintain the road infrastructure. Currently, at least 22 Internet Service Providers giving their services in Afghanistan. (cia.gov) In 2007 there were at least 535000 users, mostly in the capital area. At the same time, Television and Radio are served in Afghanistan, they have English TV programs and English Radio programs and several different languages programs (Kabul Radio). The table shows internet users in Afghanistan around several years:

(internetworldstats.com n.p 2010)

Consumer buying habits

Soft drink, especially soda drink is bought as a very famous recreational beverage in many years. Different cultures people have the same habit that drink the icy soda drink in summertime. The carbon dioxide in soda drink can bring out human body quantity heat by hiccup. Afghanistan is a four distinct season's country, in summer there is hot and dry. Follow by post-war reconstruction many foreign officers and businessmen entry Afghanistan, drinking soda drink is in their culture. And this habit will affect local population in the years that followed. Almost Afghan are Muslim, they do not drink beer and alcohol. Soda will be the second welcome recreational beverage in their society behind tea drink.

Product-use patterns

-Foreigners: consume the product as part of the daily experience and holiday experience. Due to the locations and season chosen, the heat associated with these areas it will be used for cooling down and quenching consumers' thirst. In Kabul area is hot in summer and owing to the geographic reason this area is dry.

-Locals: consume the product as part of the holiday experience. Due to the religion reason almost Afghan do not drink beer and alcohol drink. The product can be as a recreational beverage into their culture and also can be consumed any day or on special occasions.

Product feature preferences

This preference in Afghanistan for can and small bottom also can be in glass bottom in some cases to reduce cost. The 6 cans package and 24 cans box will be sold in supermarket and other retailers shop. Soda drink can be bought for storage at home or in offices. For convenience stores, glass bottom and paper cup will be welcomed because the price will be lower.

Shopping habits

Foreigners who come from China, America and Europe would most likely buy the product for work or outdoor activities that are chilled for drinking in offices or during hikes to somewhere. The product will be for cooling down and relaxing on their free time.

Locals will buy chilled packs for cooling down or later consumption with dinner. Convenience stores or supermarket will be the most likely place they could buy the soft drink. Festivals and family parties will increase consumption of the product.

Distribution of the product

Owing to the natural of the dissemination from foreigners to locals this product will start out in the region of stress concentration of foreign companies, hotels, bars, famous restaurants then move to local retailers.

Typical retail outlets

Types:

Plans:

Hotels & Bars

Beginning: Will sell in main hotels and bars, where foreigners usually stay. Glass bottom and can package will be sold.

Supermarkets & retailers

Second wave: Will sell 6 cans package and 24 cans packages in local supermarkets, for foreigners and locals later consumption.

Convenience stores and kiosks

Expanding to the local market and demand pulls the product through the channel, it is long range plan.

Vending machines

A part of second wave, main put in expatriates communities and foreign offices.

Airports and train stations

Target for the tourists (both foreign and local). Service stations in scenic spots as well.

Product sales by other middlemen

Roshan Cola Company is a local Mineral Water and Carbonated Soft Drink manufacturer. We will corporation with Roshan then our product can use its marketing channels and share the market range. Due to Roshan Company is from Afghanistan, it deeply understands the local market and we will provide more competitive ability products. (alibaba.com)

Advertising and promotion

Advertising media usually used to reach your target market(s)

Will be used television advertising on local TV channels both in local language channels and English channels will be painted in conjunction billboards by side of highway and on the side of houses. In some areas, taxi advertising will be used too.

Sales promotions customarily used

Sampling and discount are the main types used in soft drink industry.

Pricing strategy

Customer mark-ups

The Afghan inflation rate (consumer prices) is 20.7% in 2008 and 30.5% in 2009. (cia.gov)

Types of discounts available

Discounts can be as high as 10% in summer and as high as 15% in winter, depends on different season.

Compare and contrast your product and the competition's product(s)

Competitor's products

Brand name

The competition of Afghanistan's beverage market is not intense competition. Our product can own a large market in Afghanistan, but still got many competitors. Such as Coca-Cola, Coca-cola is the most famous beverage company in the world. In 2005, Coca-cola came back to Afghanistan beverage market, and it cooperation with Habib Gulzar Non-Alcoholic Beverages Firm. Coca-cola became to domestic product.

Features

Coca-Cola is carbonic acid beverage as same as our product, but it is different taste and different area. Afghanistan is a large market. Different customers have different habits. Our products can be chosen by different people, although Solo and Coca-Cola are competitors.

Package

Coca-Cola got two types package, such as Pop Can and Plastic bottle. Also it got 375ML, 2Lites and 500ML for capacity. When Coca-Cola back to Afghanistan, it wrote: "Coca-Cola back to Afghanistan." in 2005.

Competitor's prices

Before 2005, Afghanistan sold Coca-Cola were import from Iran and Pakistan. At that time, the price of Coca-cola is 0.4 USD, but when Coca-Cola produced in domestic. The price decrease to 0.2 USD to sale in Afghanistan.

Competitor's promotion and advertising methods

Coca-cola Company is a large company around the world. They used their forces to impact customers. Beverage companies always use TV, radio and internet advertising to advertise their products. It was so famous when Coca-Cola back to Afghanistan. Media support also a important way to improve brand force. That will lead people to choose which beverage to drink.

Competitor's distribution channels

Coca-colas' distribution channel is use every retail shop and supermarket to selling their product, because Coca-cola is a famous company in the world. Most of shops and supermarkets are willing to sell it. Vending machine is also another distribution channels, also include hotel and bars.

Market size

Estimated industry sales for the planning year

The Afghanistan beverage market has been steadily growing over the last fewer years. Before Coca-cola company moving in to Afghanistan. Afghanistan already had a large population like drink beverages. Afghanistan has 33million population, most of goods need import from other countries include beverage, so build a factory and sell it domestic is the best way to selling our product.

Estimated sales for your company for the planning year

Compare with the Coca-Cola company sale their product. They planned 4 million boxes to sale in each year. We cannot sale so many like Coca-Cola Company, but as we think 1 million boxes in each year is the first target. In the follow years each year increase 10% until as same as Coca-cola.

Government participation in the marketplace

Agencies that can help you

Assistance with launching the Solo beverage brand in Afghanistan may be sought from some of the following agencies:

Embassy of Afghanistan

Ministry of Commerce & Industries (MoCI)

Ministry of Finance (MoF)

Afghan Customs Department (Division of MoF)

Afghanistan Reconstruction and Development Service (ARDS)

Department of Commerce - Afghanistan Investment & Reconstruction Task Force

Department of State - Bureau of Economic and Business Affairs, Afghan Desk

Department of State - United States Agency for International Development (USAID)

Overseas Private Investment Corporation (OPIC)

Australian Embassy

(http://www.embassyofafghanistan.org/documents/BusinessandInvestmentResourceGuide-Jan012009.pdf)

Regulation you must follow

Our company must follow Government Policy. Customs brokers must be employed to process any products imported into Afghanistan and are to submit an Import Declaration to Customs. The importer needs to be registered on the Treasury Ministry's National Importers Registry and in the case of beverages; importers must also be registered on the Registry of Importers in Specific Sectors and the Federal Taxpayers. Taxes also need to submit to government.

Preliminary Marketing Plan

The marketing plan

In today's Afghanistan, consumer demand will remain unfulfilled, as available imports are often of expensive, poor quality, or both. Simplex product form will remain unfulfilled Afghan consumers at all. The market for soft drink is exceptionally large in capital city area of approximately 380,000 people, where temperatures can often over 40C in the summertime.

Marketing objectives

The goal for SOLO is to entry into the Afghan several main cities, around capital city- Kabul. This product will attract new customers (Foreigners and locals) for the soft drink.

To successfully enter the Afghan market

To achieve a 10% market share within the first step

To promote to a large consumer a taste of this product (Soft drink not only cola)

Target market(s) (specific description of the market)

The target markets are the hot summertime cities and arid conditions, where Afghan people indicate a huge market for clean and refreshing non-alcoholic beverages (Non-drinker for religious reasons).

Expected sales year 2010-2015

Expected sales in 2010 will be approximately AU$ 80 million with increases expected. Follow the first couple of years when it finds its place in Afghanistan, for instance, consumers begin to know this brand and fall in love with the taste, through the product advertising. Expected sales for the first five years are as the table:

Year

Sales in AU dollar

2010

80 million

2011

120 million

2012

200 million

2013

240 million

2014

280 million

Profit expectations year 2010-2014

The first year profit expectations will be lowest; the first year is the repair year, due to the highest cost associated with setting up the requirements. Follow the sales operating and distribution systems start to work, in the following years, the profit expectations will be higher step by step.

Years

Profit in AU dollar

2010

3.8 million

2011

28million

2012

42 million

2013

56 million

2014

70 million

Market penetration and coverage

The capital city-Kabul will be targeted heavily, owing to its position and population and foreigner's collection location. At the same time, there is resort area that attracts local and tourists.

Product adaptation or modification

The product will be adapted to fit the market in Afghanistan. These adaptations include the packaging, bottling size, color and so on. We will sell paper cup and glass packaging in Afghanistan that does not sell in Australia to reduce cost and keep the price low. The smaller bottling size is a great size for the forgeries and locals for lunch or dinner, and also for outdoor activities, easy to carry.

Core component

The core component of SOLO is soda, sugar and fruit flavors. There are 4 variants of this product: original lemon, lemon & lime, solo strong and solo sub (sugar free). The latest addition is solo strong and also, it is energy drink which contains guarana and caffeine. This variant is to fit in with male consumers who like energy drink. In the other hand SOLO SUB is to fit in female consumers who do not like sugar.

Packing component

The product's label must have the following information, both in Afghan and English:

Brand name of the product

Type of product (carbonated beverage/energy drink/Moslem drink)

Country of origin

Company name and address

Company Slogan

Nutrition information table (especially alcohol-free)

Short introduction of Company

Net content

Support services component

We will set a support service line in the form of an 1800 number (Toll-free telephone number) for consumers. At the same time, our home page (Afghan) will create an area for consumers' feedback with any problems or advices. The number and web address will be clearly identified on the packaging.

Promotion mix

Advertising

Advertising will be the first show in a new market and also the first choice for a company to communicate with potential customers. Advertising can send the information quickly to the audiences and has a huge reach. It always accesses the mass media and makes affection in short time. Advertising can develop market and reinforces the brand and helps us sells our products.

The main advertising plan is to use television, radio, internet, newspapers and billboards. After economic analysis and research, television is the highest used media in Afghanistan. Not like internet, on TV set can be watched by one person or whole families. The number of the audiences can be huge and the affection will be deeply.

The other way of TV advertisements is in a form of product placement. Placing the product advertisements before or behind the news or others TV programs (sports or cartoon) will increase the reach for our product. "Game on" is the theme for SOLO's advertisements, it is a free lifestyle, to educate the target market on happiness and passion.

The other form of advertising used will be billboards. There is a great form of outdoor advertising which is use a painting on building envelopes and beside the freeways where they command high-density consumer exposure.

The radio advertising is a form of advertising via radio. Local radios in Afghanistan have big range of audiences, both foreigners and locals (Radios have English programs).

The newspaper and magazine advertisements will be a continuation of the television and radio advertisements using pictures. The internet advertisements as well to put in this market by the follow step.

Objectives

To let consumers (foreigners who are not Australian and locals) understanding our product and fall in love with it (Taste and this lifestyle).

To make an impact in the target market in those cities we have chosen to promote SOLO, using different media.

Not only promote the product but also promote the Australian lifestyle- "Game on" (happiness and passion, especially for locals).

Media mix

First step we will use TV advertisements to open the market, make consumers to know us. Radio and billboards are the second step to make consumers understand what we provide that not only just soft drink but also a lifestyle. Internet is the auxiliary channel to expand the market range. Four different media will work together.

Message

The information will send to consumers clearly. We promote a lifestyle which called "Game on". Let consumers feel happy and fill with passion.

Sales promotions

There are two types of sales promotions: Trade sales promotion and consumer sales promotion. Trade sales promotion is known to "push" the products through the retailers, induce retailers into "stocking and supporting" certain products. Consumer sales promotion attempts to "pull" a response from consumers give directly to consumers to encourage them into "action".

The trade sales promotion strategy to the selected outlets will include discounts and surrender part of the profits. In another way, push strategy used will be for staff of retailers to give them push money for not only stocking products but also supporting them.

The consumer sales promotion strategy includes many tactics to induce purchasing of SOLO. The first tactic will be to sell the soft drink in glass bottle and in paper cup. This will be a popular style to sell SOLO in Afghanistan, because these packaging will reduce the cost and keep our price always lower and it is a good packaging for lunch or dinner. The second tactic is to run a redemption game is called "Kick the can!" The game will enable player to win an I-pod and we will put the competition show on our official website. The players have an opportunity is watched by the whole world.

Objectives

A push strategy to retailers by surrender part of the profits.

A pull strategy to promote to new customers of offering a redemption game.

Personal selling

Personal selling is the face- to- face promotion of the products to the customers by agents, store employees, assistants and relations officers. It can be effective because of the persuasiveness of the sales staff that has the ability to inform a customer's decision.

The personal selling can be in a way by local boys who wear the sportswear (yellow jersey) to promote SOLO. Looking like the sports star in the commercials and newspaper advertisement to provide taste testing and distribute the circular.

Other promotional tools

The current website for SOLO is in English, the same website will be used in Afghan just need to click a bottom to change the language. This website will provide online flash games ("kick the can") and also, products information and consumers can give feedback on it.

Distribution: from origin to destination

Port selection

-Origin port: Perth is a good selection as the headquarters and the origin port for distribution of the product. This is because Perth is the closest and largest city in Australia to Afghanistan. In addition, many cargo ships in the Fremantle Port sail to the Gulf of Aden.

-Destination port: Kabul as the capital of Afghanistan is the most suitable destination port in Afghanistan. It locates in the centre of the afghan transport. Moreover, the largest airport of Afghanistan, Kabul international airport, is in the Kabul. In addition, Kabul is the cargo distribution centre, both goods and aids distribute to the all over Afghanistan from Kabul.

Mode selection

Type

Route

Advantage

Disadvantage

Air carriers

Perth -- Kabul

Fast & convenient

Expensive & less flights

Air +Motor carriers

Perth --China--Kabul

Fast & inexpensive

Long trips & strict customs in Pakistani

Ocean + Motor carriers

Perth--Pakistani--Kabul

Short trips & inexpensive

Slow & strict customs

Perth--Iran--Kabul

Short trips & inexpensive

Slow

Packing

The packing of the products need be light because of the tariffs are charged according to gross weight. As a result, this could reduce the cost in the tariffs.

-Marking and label regulations: The labels of solo which will transport to Afghanistan need some marks to express goods of information:

Logo of solo

The export country (Australia) & the import country (Afghanistan )

The net, gross and legal weight

This information could help Logistics Corporation reduce the mistakes in the process so that it saves time and fees for transport.

-Containerization: The containers have two sizes: 20 feet and 40 feet. For reduce the cost of transport, the maximum containers are suitable to the demand of transport. As a result, 60 cubic meters in volume could be used in the 40 foot containers.

Documentation required

-Bill of lading: Some normal information, such as name and telephone and the afghan customs broker and freight forwarder, is necessary to transport successfully.

-Commercial invoice: Commercial invoice is very important in the process of transport. This is because it could explain the responsibilities of the parties and reduce the mistakes in transfer of goods. The following are the main points:

Place of issue

Issuer and contact way

Name of ship

Iranian port of entry and date

Freight forwarder and contact way

Information of truck team

Consignee name and contact way

Marks

Origin country

Number, packages and quantity of items

Detail description of the goods

Total value

-Shipper's export declaration: Shipper should declare the goods in kilograms with net, gross and legal weight.

-Statement of origin: The statement claims the goods entry into Afghanistan from Australia. It is important to the decision of tariffs or special tariffs for Australia.

-Special documentation: Packing list: it explains the information about the description of goods, value of goods, weight and volume.

Insurance claims

Insurance is necessary to the international trade. In addition, a quality insurance service is supplied by the Federal Government's Export and Finance Insurance Corporation (EFIC).

Freight forwarder

Some services have to considered, including supply chain management, warehousing, third party bonded warehousing, inland transport, customs brokers, letters of credit, logistics, labeling and food and drug administration registration.

Cargo Force: Icon Freight Services

Unit 4/75 Queen Victoria St

Fremantle, WA 6955

Channels of Distribution

There are not the expert retail companies in Afghanistan. As a result, a local agent who is familiar with local conditions is very necessary to sales in Afghanistan. The sales of solo in Kabul are the first step in Afghanistan.

Retailers

Type

Number

Mark-ups

Cash/Credit

scale

Hotels/resorts

15

40%--50%

C/C

Medium/Large

Restaurants

30

20%--30%

C/C

Medium/Large

convenience store

100

10%

C/C

Small/Medium

Vending machine

500

5%

Cash

Small

Wholesale middlemen

The agent could develop the sales by his relationship net in Kabul.

-Type and number of wholesale middlemen: The local condition, such as cultural effects, is a important element which being considered. It is the best that we can entry the all wholesale middlemen.

-Mark-ups for class of products by each type: According to the consumptive level and the location, we make the different mark-ups.

-Methods of operation for each type (cash/credit): The different people will consume in the different situation. For example, the youth often buy drinks in the vending machines.

-Scale of operation: The consumptive level decides the scale of situations. In addition, the faction of the wholesalers is another reason about the scale of wholesalers.

Import/export agents

Because the transport need through a third country, the varieties of customs procedures are a serious issue of export. Moreover, language is a problem which cannot be ignored.

Warehousing

Warehousing is an urgent problem before the goods arrive in Kabul.

-Type: The normal warehousing is enough for the goods. However, if the goods are saved in icehouse, it is perfect.

-Location: The suburb of Kabul is a good location. It is beneficial to receive and transport the goods. In addition, it is convenient that agent transports to the urban of Kabul and distributes the goods all over the country.

Price determination

Price will be calculated per liter to be borne by exporting to Afghanistan.

Cost of shipment of goods

The cost of shipping is about $12000 per 40 foot container-load.

Transportation costs

Transportation costs are estimated at $1000 per car after import to the Afghanistan. Totally about 5 cars per 40 foot container-load is $5000.

Handling expenses

Some expected charges related to handling, port and transport surcharges are (40 foot container-load):

Terminal charges (Fremantle) - AUD$200 per container-load

Security fee - AUD$150 per container-load land in Australia and Afghanistan

Document fees -AUD$100 per bill of lading

Destination charges - US$650 per container

Insurance costs

Insurance costs about AUD$300 per container-load.

Customs duties

Customs duties is about 25% per container-load

Import taxes and value-added tax

Import taxes are about 0.8% of customs duties, and value-added tax is about 15% of all goods.

Wholesale and retail mark-up and discounts

20% to 50% discount belongs to dealers.

Company's gross margins

Company's gross margins are estimated at approximately 10% at beginning but it will increase after us cooperation with internal.

Retail price

As same as Coca-cola is 0.8 USD per can, or 1 USD per liter. The price also decrease when we cooperation with internal, it will be half of that price. And also belongs to some profit that we need achieve such as promote activities.

Terms of sale

Some terns of sale are belongs to internationally accepted. "Whether your company is the buyer or the seller, it's important you understand these terms of sale because they determine: when title to the goods passes and thus, who assumes the risk of loss, damage, or delay while the goods are in transit; which party--the buyer or the seller--has the right to specify which carrier will perform the transportation service; and who pays the transportation charges."(Bohman, 2002, pg. 27)

Method of payment

There are many methods of payment. We can choose many ways for our payment as following:

Cash in advance: It is not the convenience way to pay full payment before shipped. Also huge cash is not convenience to take anywhere. It is risk in the trade internationally.

Letters of credit: Convenience and the mostly wide used method in the international trade. It is a method between two banks and companies. The buyer will provide payment to the bank that will in turn pay the seller on presentation of appropriate documents such as the bill of lading, invoice and description of the goods.

Open accounts: Goods are sent to the buyer first and payment received later, simply on invoice. The advantage is easy that we can pay all at the end of year. The disadvantage is, when trade finished buyers or sellers did not receive their credit may worried about that.

Pro forma financial statement and budget

Advertising and promotion

Advertising and promotion has to be much emphasized to be successful in Afghanistan market. These advertising promotion costs include television, radio, internet, newspapers and billboards as well as personal selling and other sales promotion.

In addition, this amount of costs will be increased for the first year to fifth years.

Expense of advertising and promotion for the first year will include following:

Addvertising

Television

12,000,000

Radio

1,000,000

Internet

250,000

Newspapers

650,000

Billboards

800,000

Sales Promotions

1,500,000

Personal Selling

5,000,000

Total Advertising Expenses

21,200,000

Advertising is the one of the most emphasized elements to be successful in the particular market. Especially, most of people in Afghanistan use Television more than other information collecting methods such as radio, internet, newspapers and billboards. Therefore, we will set up the highest amount for television advertising fee. Total advertising expense will be AUS 21.2million for the first year.

Distribution

The product will be sent by flights, motor carrying and shipping to Kabul. All distribution expense is including flights, shipping, motor carrying, container costs and middlemen costs. It must be reached AUS 35 million in the first year.

Production

Product costs associated productions which include product itself, the labeling as well as packing costs. It will be estimated at AUS 15million in the first year.

Pro forma annual profit and loss statements

This amount is based on estimated sales and costs for the first year and fifth years.

Annual Profit and Loss Statement-Year 1

　

Revenue

　

　

Sales

80,000,000

　

　

Total Sales

80,000,000

Expenses

　

　

Advertising

21,200,000

　

　

Overheads

5,000,000

　

　

Distribution

35,000,000

　

　

Production

15,000,000

　

　

Total Expenses

-76,200,000

Total Profit

3,800,000

　

　

　

　

　

　

Annual Profit and Loss Statement-Year 5

　

Revenue

　

　

Sales

280,000,000

　

　

Total Sales

280,000,000

Expenses

　

　

Advertising

85,000,000

　

　

Overheads

15,000,000

　

　

Distribution

70,000,000

　

　

Production

40,000,000

　

　

Total Expenses

210,000,000

Total Profit

70,000,000

　

　

　

　

　

　

Resource requirements

Finances

Financial resources will be required to set up the starting out costs for exporting to Afghanistan then utilized in administration, production, distribution, promotion, transportation and associated costs.

Personnel

Personnel resources will be required human resources such as marketing and sales staffs, administrative, finance and production. Personal resources will be based in Afghanistan and also, sales teams and warehouse supervisors will also be required as personnel.

Production capacity

At the moment, productions have been occurred within Australia and it is transported to Afghanistan. After production becomes more stable then production will be moved within Afghanistan. It can be saving the transportation costs as Australia to Afghanistan.

Source of information

Afghanistan's Communications. (n.d.) Retrieved September 24, 2010, from http://www.xpatulator.com/outside.cfm?lid=1

Afghanistan's Web Site [ACC]. n.d. About Afghanistan. Retrieved September 23, 2010, from http://www.afghanistans.com/Information/defaulf.htm

Afghanistan - Population. (n.d.) Encyclopedia of the Nations, Retrieved September 28, 2010, from http://www.nationsencyclopedia.com/Asia-and-Oceania/Afghanistan-POPULATION.html

Afghanistan: Trade Policy and Integration. (2010). International Economics & Trade in South Asia, Retrieved September 28, 2010, from http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/EXTSARREGTOPINTECOTRA/0,,contentMDK:20592515~menuPK:579454~pagePK:34004173~piPK:34003707~theSitePK:579448,00.html

Alibaba. (n.d.) Retrieved September 23, 2010, form

http://www.alibaba.com/member/af108871396/aboutus.html

Bohman, R. (2002). Logistics Management

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Central Intelligence Agency, (2010) Retrieved September 23, 2010, from

https://www.cia.gov/library/publications/the-world-factbook/geos/af.html

Haidari, A. ( 2010). Will Afghanistan's $1 Trillion of Minerals Secure Foreign Investment. Retrieved September 28, 2010, from http://oilprice.com/Geo-Politics/International/Will-Afghanistans-$1-Trillion-of-Minerals-Secure-Foreign-Investment.html

Herold, M. W. (2003). Foreign Investors Take A Pass On Karzai's Afghanistan. Retrieved September 28, 2010, from http://cursor.org/stories/emptyhat.html

Internet World Stats, (2010). Internet Usage and Population Statistics. Retrieved September 24, 2010, from http://www.internetworldstats.com/asia/af.htm

Lau, M. (n.d.). Afghanistan's Legal System and its Compatibility with International Human Rights Standards. Retrieved September 15, 2010, from

http://www.unhcr.org/refworld/pdfid/48a3f02c0.pdf

Qazi, A. (2008). Education. Retrieved August 29, 2010, from http://www.afghan-web.com/education/

Qazi, A. A Look at the Languages Spoken in Afghanistan. Retrieved September 15, 2010, from http://www.afghan-web.com/language/

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