The Role of Branding and Budget 2020
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As the budget 2020 unfolds, it has ignited the flames of hopes of a positive economic outlook towards 2025 despite several impediments that are obstructing the development pathway of Sri Lanka. Needless to say that Sri Lankan economy was already sinking when the unexpected attack took place in April 2019. As the economy was recovering from the misery, the third hit came with COVID19 pandemic which not only affected Sri Lanka but took the whole world by storm. Pandemic was not expected at the point where the new presidential candidate of SLPP begun to elaborate on his vision for the country; Vistas of Prosperity and Splendour (Saubhagye Dekma)however has become a challenge for the new government to achieve with the prevailing conditions due to the pandemic situation. In this backdrop, the most awaited budget was presented to the parliament opening up many doors for Sri Lankan business communities and also for the SME sector in Sri Lanka to make use of.
It’s evident that the budget has paid attention to minimize imports and encourage exports as exports will be instrumental in reducing the balance of payment as it can bring much needed foreign currencies to the country.
The doors are open for local farmers to get into agriculture in big scale as they can be directed to various countries as exports. Also there are incentives given for dairy manufacturers to produce milk powder in Sri Lanka which can be export oriented. Further, the pharmaceutical manufacturers are availed with an incentive scheme to produce pharmaceutical products in Sri Lanka with the expectation of minimizing spending on pharmaceutical finished product imports. Both these sectors would need to brand these products properly as both sectors are sensitive sectors for which there are many established brands in the market.
However, meeting right quality standards would definitely assures good returns in both sectors. Sourcing of quality raw material, quality packaging, meeting required standards are key to success in these sectors.
As the second important area highlighted in the budget is the agriculture sector.
1. What should be the direction or the strategy for Sri Lankan agriculture products in the world market?
Sri Lanka is not in a position to compete with conventional or non-organic sector in the world market hence, the first decision to be taken is to compete with a clear differentiation which is the organic sector. With a limited area of land which has produced unique spices which are not second to any other varieties in the world, and with an array of tropical vegetables and fruits, Sri Lanka clearly can reach out to the world market with a Point-of-Difference which is unmatchable and will easily be defendable. Moreover, Sri Lanka and China have had a long standing relationship between the two countries from time immemorial and it is even written in the history. The need of the hour is to support this heritage with modern day thinking and branding.
2. Why organic sector and why not the conventional sector?
Because Sri Lankan production volume is not competitive enough to fight in the conventional or non-organic sector. With the given land and resources the best way to compete is to establish our products in the organic market. With a limited volume we should be able to command a higher price for the produce of the sector.
3. What are the market segments that need to be targeted?
For the longest time, we have been focusing on the American, European or Australian markets for our agri products as we couldn’t see other markets which were opening up in the region. Today, Chinese middle income sector has increased up to 600mn and there are enormous opportunities to tap into. In China, this sector spends lavishly if the product comes in right quality. Therefore the price is not a concern but what matters the most is quality. Instead of worrying too much on other markets, Sri Lanka should position herself in the Chinese market as the most trusted, authentic and reliable organic food supplier.
4. How the marketing mix elements are going to be crucial in implementation of the strategy?
In the execution of the above strategy Sri Lankan players can look at following key points;
a. Product - as explained above, meeting expectations of the New Middle class of China should be taken as a challenge. Meeting quality standards, attractive and quality packaging, certifications, maintaining sensory appeals (Taste, aroma etc) will be crucial for success. Quality with class and high-end appeal is required as an element of the offer.
b. Price – Price doesn’t have to be cost-plus instead it can be kept at a level above the average as the manufacturers will have to spend extra money on quality packaging, meeting standards and bio degradable and recyclable material that should go in to packaging.
c. Place/ Delivery – Online retail sector of China is growing faster than any other parts of the world and with compared to where Amazon is, the Chinese retail market is miles ahead of the game of retail today. Therefore, Sri Lankan brands have the opportunity to penetrate into the Chinese market through online.
d. Promotion – promoting these products should be cost effective at the same time, effective in reaching out to the right target. Towards this end; the most reliable and relevant media would be social media as social media allows the manufactures to be creative and to reach out to many sectors and markets like never before.
Way forward
Diplomatic services representing Sri Lanka in China will have to lead this transformation process by establishing close tie ups with regulatory bodies in establishing an understanding between the two countries. Organic certification process has to be reviewed to make sure that the local farming communities have access to information and also access to required institutions if they are to export to China.
PAl so there should be a change in the direction when it comes to export promoting local authorities in Sri Lanka to support the local manufacturers and farmers. His Excellency Ambassador of Sri Lanka to the People’s Republic of China- Dr Palitha Kohona who is going to be taking his office in Beijing will surely add value to Sri Lanka in terms of establishing processes and procedures which would pave the way for local farmers and manufacturers of food products to reach out to the booming Chinese market with right certifications and standards.
