Mediterranean Agronomic Institute of Chania

(MAICh)

Agricultural Marketing and Policy

Marketing Report (Group B)

Department: Business Economics and Management

Lecturer: Prof. John Stanton

Students: Levon Harutyunyan (Armenia)

Narek Hovhannisyan (Armenia)

Chania 2015

Introduction

We are a marketing department of a Armenian company ‘’Prunus Armeniaca’’. The main

issue is market growth policy and entry in foreign markets. European market are very intense

and competition is very high. For the company further market development chosen U.S.

market. Especially we will concentrate in three U.S. states which are Alabama, Mississippi,

Louisiana. Geographically they are near to each other which will help us in more comfortable

(low cost) way organize distribution process. For our company the main competitive advantage

will be taste, and the slogan that ‘’Taste is a king’’ is very common for our case. In the below are

given characteristics of the our products (apricot) in which are based our advantages. The

second most important advantage is the fact that our products are natural and national at the

same time.

We like to eat many fruits and vegetables. Maybe this comes from the fact that we are

from Armenia, the place that is rich in fruits and vegetables. But there is one fruit that we like

most of all, and which has a special meaning for us. We think the reason again is the fact that

we are Armenian and the fruit is apricot (“tsiran” in Armenian). The botanical name of the

apricot is Prunus armeniaca.

The apricot has been the symbol of nationality and victory for Armenians for many centuries.

One of the three colors of the tri-color Armenian flag is also the color of the apricot. Every year

in July in Armenia, during the harvest of apricots an apricot festival is held.

Have you ever seen a real Armenian apricot? There is a big difference between the Armenian

apricot and an apricot which has grown in USA, or has been imported from any country over

the world.

The apricot opens. In the middle lies the kernel. Unlike the kernels of other fruits, the apricot

kernel is edible. It is loved not only by children but by adults as well. To eat the kernel, it is

necessary to crack the wooden exterior with a nutcracker, take out the core which is covered by

a thin yellowish skin. And then you hold in your hands the very heart of the apricot – two thin

platelets the color of milk connected to each other which crunch under your teeth and have a

great taste. Detailed information about chosen market, about the states Alabama, Mississippi

and Louisiana are given below in Figure 1, Figure 2, Figure 3, Figure 4.

Figure 1. Adult Obesity Rate by State, 2013

Source: http://stateofobesity.org/adult-obesity/

Source: http://stateofobesity.org/adult-obesity/

Figure 2. Leading U.S. states based on deaths due to heart diseases in 2010 (per 100,000

population)

Source: www.statista.com

Figure 3. U.S. Birth Rates 2006 – 2013 by States

Source: http://www.cdc.gov/nchs/data/databriefs/db175.htm

Figure 4. Exporting and The Target Market

1. The Strategic Marketing Process

1.1 Domestic and Global Economy

The latest developments in the industry come to prove that Armenian apricot either

fresh or processed has high potential to compete in international markets.

Yet, apricot Value Chain in Armenia is regarded as one having high seasonality and yield

instability. The first factor is conditioned by overreliance on one variety (despite the wide

diversity of apricot both early and late ripening varieties grown in Armenia), while the reason

for non-stable yield is poor anti-hail and frostbite treatment and prevention practices

implemented in apricot orchards. These factors do not allow Armenian exporters to meet the

demand in international, particularly Russian, markets in order to maintain their competitive

edge against the main apricot exporting countries.

In Armenia the three stages of the fresh fruits movement from orchard to final

consumer are identified as follows: pre-processing, processing, and post-processing.

Figure 1.1 Value Chain: the three stages of the fresh fruits

We need take or consideration to the last phase of the value chain, which is shown in the

figure1.1

Figure 1.2: Apricot production volumes and yield per hectare in 2000-2012 in Armenia

Source: Ministry of Agriculture of RA

Figure 1.3: Volumes of procured apricot by the processing companies

in Armenia (1999-2012), tons

Source: Ministry of Agriculture of RA

As it is seen from the chart above the procurement of fresh apricots significantly fluctuates

from year to year. Armenian processors are still unable to secure the sufficient quantity of raw

input. It depends on the harvest of apricots in the given year. It implies that even if an

Armenian processor manages to penetrate into international markets, it has extremely limited

ability to maintain its market position. So that international markets share of Armenian

processed fruits can be taken away by more reliable and competitive suppliers from other

countries.

That is why our company will concentrate not in the export of the fresh apricot, which will reduce the

competition weaknesses.

During 2008 when the Russian economy has been hit by financial crisis the Armenian processing

industry decreased the volume of procured apricots by 42%. Today also we can say that the

economic situation is not stable. However, recently there has been a clear trend of increased sales

of the processed agri-produce in some European countries and in the USA as well. This became

possible because processors underwent the processes of certification and their products now

are more traceable, which is a very important for especially western and more demanding

customers.

Figure 1.4: Export of fresh apricots from Armenia, tons

Source: Ministry of Agriculture of RA

Industry Strengths

1. Favourable climate as well as soil and water for apricot cultivation in Armenia.

2. Well known brand in the largest export country – Russia.

3. Several indigenous varieties – in particular Yerevani, Sateni, Nakhijevani.

4. Low labour costs.

5. Apricots is zero-discharge fruit in Armenia, it is consumed not only fresh, but also dried,

processed, being used in cosmetics and pharmaceutical production.

6. Organic apricots production and export established since 2001.

7. Potential to produce 90,000 t of fresh and processed apricots for export

Global Market Overview

Figure 1.5: Apricots, Dried Imprts by Country in US Dollars

Source: http://www.indexmundi.com/trade/imports/?commodity=081310

Figure 1.6: United States Yearly Imports in US Dollars Apricots, dried

Source: www.statista.com

Figure 1.7 United States Yearly Imports in US Dollars Apricots, fresh

Source: www.statista.com

1.2 Science and Technology

More solar dryers are used for dried apricot production lately were built additional units. The

preventive method against hails is the usage of anti-hail systems. Today

local R&D company manufacturing various hi-tech innovative facilities for different

applications (agriculture, energy, utilities, etc.), offers “Zenith” anti-hail system. It is a shock

wave generator used to prevent the formation of hailstones in the clouds and is operating on

liquid gas. It is estimated that it has 70-80% effectiveness in transformation of hailstones into

rain. Small anti-hail Zenith station can cover up to 20 ha and bigger stations – 80 ha.

Along with the technological development, the factory is constantly being accoutered with

modern equipment used in the production of drinks. Ion-exchange tool for the filtration of

brandy and wine And the reverse osmosis plant RO-6000 GDP for the processing of water are

among the latest innovations.

1.3 Food Product

The our company “Prunus Armeniaca” produces Jams & Conserves , Apricot Ice Tea,

Dried Apricots (Lavash), and Apricot Cognac. The company produce these type of products mainly

for export. We know what’s under our umbrella, which is very important for building further company

strategy.

1.4 Laws and Government Policies

In the early 2000s in the scope of economic reforms the Government of Armenia

declared the development of agriculture as a priority.

Since 2000 the orchards and berries shrubs area have been steadily increasing. The

Government of RA contributed to the process by subsidizing the planting of perennial crops;

farmers had not to pay the land tax for the first 3 years of newly planted orchards, so that the

farmers would pay the tax after orchard will become productive.

Since apricot production is one of the major directions of fruit production in the Republic of

Armenia and since Armenian apricot is considered a brand product in both internal and foreign

markets, the Government attaches high importance to this Project. The Project is aimed at

creating suitable preconditions for the preservation of apricot genetic resources and, especially,

their use for selection purposes.

Of the 40 varieties currently zoned in the Republic of Armenia, three occupy about 98%. In this

regard the Government policy includes provisions on diversification and geographical expansion

of the apricot production which would allow both adding farmer incomes and reducing poverty.

In addition, on November 30, 2006, the Government of the Republic of Armenia adopted

Decision No. 1826 on the "Strategy for Sustainable Agriculture Development in Armenia".

2 Market Entry Strategy

Exporting is the most traditional and well established form of operating in foreign

markets. Exporting can be defined as the marketing of goods produced in one country into

another. Whilst no direct manufacturing is required in an overseas country, significant

investments in marketing are required.

Figure 2.1 International Marketing Entry Methods

Source: http://www.learnmarketing.net/international%20marketing%20entry.htm

For our company we choose the Direct Export method where the organisation produces their

product in their home market and then sells them to customers overseas. The company will not

cooperate with retailers and supermarkets but will supply his products to local customers

(shops, restaurants

3. Marketing Mix Concept – 4Ps

1. Dried Apricot (Lavash)

Product : T'tu Lavash (t'-TOO lah-VAHSH), which are thin paper-like layers of sour plum puree.

Known as a "fruit rollup" in the USA, you do just that: take the t'tu lavash , roll it and eat.

Name : ALMILA

Taste : Ideal combination of sweet and sour prepared with organic apricot

Size : 100g, 250g, 500g

Forms : Thin and long with the label of apricot

Healthful and Benefical Characteristics : Contains components which are necessary for

human diet

Consits of : Apricot, sugar and lemon water

Contains : Vitamin C, vitamin A, vitamin B6, Folate

Packaging : The entire assortment is placed inside the cellophane and closed hermetically, later

to be put inside a box.

Weaknesses : Probably will have short expiration date.

Target Group : Children and pople with helth issues (heart diseases, pregnant women)

Place : Shops, amusement parks, sport complexes

Promotion : We will try to sponsoring amusement TV programs for kids in order to put our

commercials and advertising in radio sport programs

Price : At this moment of time it is impossible to determine (not enough available information)

2. Apricot Jam & Conserves

Product : What could be more delicious than a piece of bread with butter and apricot jam.

Apricot jam is useful for pregnant women, children and the elderly, as well as for people

suffering from cardiovascular diseases. It is also used for desserts. Also phosphorus has a

positive effect on brain cells. It is hard to imagine a family tea party without this tasty and

healthy dessert.

Name : ALMILA

Taste : It tastes like apricots and ideally saved initial taste

Size : 250g, 500g

Forms : Different forms of glass containers

Healthful and Benefical Characteristics : Apricot preserve lowers high blood pressure, reduces

neural excitability due to the huge amount of calcium and magnesium.

Consits of : Apricot, sugar

Contains : Vitamin C, vitamin A, vitamin B6, Folate

Packaging : The entire assortment is placed inside the glass containers and closed hermetically

Weaknesses : Seasonality (more common for use during the winter)

Target Group : Product for the whole family, pregnant women

Place : Shops, restaurants and hotels

Promotion : In commercials it is necessary to explain the advantages that the our apricot jam

has, comparing with other containers. The taste of the product should also be persuasively

advertised

Price : At this moment of time it is impossible to determine, but we can predict that it would be

very competitive.

3. Apricot Ice Tea

Product : This is a delicious drink made from black tea and apricot. It will give you fresh

emotions and feeling in hot and sultry days.

Name : ALMILA

Taste : It tastes like apricots and ideally saved initial taste

Size : 330 ml, 500 ml

Forms : Different forms of metal containers

Healthful and Benefical Characteristics : Apricot preserve lowers high blood pressure, reduces

neural excitability due to the huge amount of calcium and magnesium.

Consits of : Apricot, sugar and black tea

Contains : Vitamin C, vitamin A, vitamin E, vitamin K

Packaging : The entire assortment is placed inside the metal containers and closed hermetically

Weaknesses : Seasonality (more common for use during the summer)

Target Group : Product for the whole family

Place : Shops, restaurants and cafes, sport complexes, amusement parks

Promotion : In commercials it is necessary to explain the advantages that the our apricot ice tea

has, comparing with other containers. The taste of the product should also be persuasively

advertised especially in TV

Price : At this moment of time it is impossible to determine, but we can predict that it would be

very competitive.

4.Apricot Kernel

Product : We supply premium Apricot Kernels, grown without the use of any chemicals

Name : ALMILA

Taste : It tastes like apricots and ideally saved initial taste

Size : 330 ml, 500 ml

Forms : Different forms of metal containers

Healthful and Benefical Characteristics : Like most nuts and seeds, Apricot Kernels are very

nutritious. These diets contain large quantities of nitriloside rich foods containing Amygdalin -

apricot kernels, bitter almonds, apple pips, grape seeds, millet, broad beans, and many other

seeds of beans and grains. Highly hybridised foods have only low amounts of Amygdalin.

Consits of : Apricot kernel and salt

Contains : B17, B15 and Natural Enzymes

Packaging : The entire assortment is placed inside the cellophane containers and closed

hermetically

Weaknesses : Difficult to save, they are dried immediately and processed and stored under

strict conditions

Target Group : Product for the whole family

Place : Shops, sport complexes, amusement parks, cafes

Promotion : In commercials it is necessary to explain the advantages that the our apricot kernel

has. The taste of the product should also be persuasively advertised

Price : At this moment of time it is impossible to determine, but we can predict that it would be

very competitive.

5. Apricot Cognac

Product : With the usage of Armenian traditional brandy making methods Apricot strong drink

is made thanks to Armenian apricot growing under the flaming sunbeams and five-year-ageing

in oak barrels. Prepared with unique flavor and aroma. Alcohol 50%

Name : ALMILA

Taste : It tastes like apricots

Size : 500 ml, 750 ml, 1000 ml

Forms : Different forms of glass containers

Healthful and Benefical Characteristics :

Consits of : Varies, though typically with characteristics combining nuts, apricot, caramel, honey,

vanilla, and/or other spices

Packaging : The entire assortment is placed inside the glass containers and closed hermetically

Weaknesses : Difficult to save, they are dried immediately and processed and stored under

strict conditions

Target Group : Product for the people with high level of income (higher than average)

Place : Hotels, restaurants and shops

Promotion : In commercials it is necessary to explain the advantages that the apricot cognac

has, comparing with other brands. The taste of the product should also be persuasively

advertised.

Price : At this moment of time it is impossible to determine, but we can predict that it would be

very competitive in luxury market brands of cognac.

References

Web – sources

1. http://www.shen.am/PDF/Apricot%20Value%20%20Chain.pdf

2. http://www.bsc.am/dried-

fruit/BSC_OXFAM_Dried%20Fruit%20Supply%20Chain%20Report-English-25-01-

2013.pdf

3. http://poinstitute.com/

4. http://gain.fas.usda.gov/Pages/Default.aspx

5. http://stateofobesity.org/adult-obesity/

6. www.indexmundi.com

7. www.statista.com