“RIVA INTERNATIONAL

CASE STUDY”INTERNATIONAL MARKETING

Miatto Francesca Poojara Shaumil

Triantafylli Ioanna

The Structure of Riva International

RIVA PRODUCT CORPORATION

Riva UK LtdRiva Belgium

FranceFrench-

Speaking Africa

Belgium

In 2007 a new skincare cream, the Nutrifying Complex Crème Riva, was developed by the US R&D team. This new cream was patent protected.

In February 2009 Riva Belgium was licensed to sell the cream in Belgium and France. Consumers liked the product and the good quality-price ratio. ✔

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2

Timeline of events

In August 2012 deliveries dropped towards English distributors. Deliveries steadily diverged from sales.

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In January 2012 Riva UK Ltd started producing the same cream, but positioned itself as a premium product.

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• Highly priced

• Supported by heavy advertising and promotional expenses

Timeline of events

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In November 2012 Mrs Gain, Marketing Director in Riva Belgium, is worried about the difference between the production of the cream in Belgium and sales in Belgium and France (20% lower).No signs of excess inventories in the distribution channels.

PRODUCTION

SALES IN FRANCE AND

BELGIUM

Where are the produced creams??

Timeline of events

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Mrs Gain talks about the problem with the Belgian CEO, Mr Graff. He underestimates the problem!Mrs Gain calls an external auditor to analyse the situation.His findings:• There is an actual problem• No signs of excess

inventories• Deviations are associated

with deliveries towards 2 wholesalers

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Mr Graff receives confidential note from UK’s CEO: A “Made in Belgium” box was seen here!

Timeline of events

The company is facing PARALLEL IMPORTS problems.

Lower sales in Belgium correspond exactly to UK’s

drop in deliveries.How is that possible??

Belgian wholesalers are selling to UK wholesalers at 15% below the UK company

price!

I would try to solve the problem with a new

international pricing strategy.

Facts and Conclusion

Example of a Parallel Market:Pharmaceutical products are often sold in parallel markets, due to differences in government-dictated prices.

Parallel Markets

Parallel markets are two or more markets where the same product, produced by the same company, is sold at different prices.

Parallel markets are based on the principle of arbitrage, the practice of buying a product at a low price in one market and selling it at a higher price in another market.

Parallel markets are open, legal, and regulated market exchanges.

Greece had the 5th lowest pharmaceutical prices in the EU in 2005 In 2001, GlaxoSmithKline, in an attempt to stop parallel trading causing shortages in Greece, stopped supplying certain drugs to Greek wholesalers.

Parallel Markets

Spain had the 7th lowest In Spain, GlaxoSmithKline, Pfizer, and Novartis have set up a dual pricing scheme to solve delivery problems that affected spanish pharmacies.

In Europe, where there is close proximity, few trade barriers and companies are free to set their own prices, consumers will often travel to the lowest-priced country in the EU and purchase large quantities of drugs.

According to a report released by the European Federation of Pharmaceutical Industries and Associations (EFPIA) in 2008, the value of parallel trade across the EU was estimated at $5.7 billion in 2006.

To combat the problem, drug companies are considering limiting supplies to an amount equal to the estimated demand in each country.

Parallel Markets

1. What are the reasons for these parallel import problems?

2. What can be done to stop wholesalers exporting to the UK?

3. Is it necessary to change the marketing strategy of Nutrifying Complex Crème Riva, particularly its price? If so, where and how should it be implemented?

4. How should one organize a coordinated international marketing strategy across national markets? Prepare the report requested by Graff.

Questions