Biodegradable Toilet Paper Market Entry Strategy in Germany

Introduction

The drive to "go green" — making consumer choices that take environmental stewardship into account — has been growing substantially over the past decade, and is more prevalent in Europe than in North America and other parts of the developed world. Germany is no exception to this trend, and with a relatively dense yet stable population, the country is well suited to internal innovation rather than expansion-driven growth. Biodegradable toilet paper is the type of product that could perform quite well there. In developing a market entry plan for this product in Germany, a great deal of country-specific information — as well as more general correlations between environmental factors and marketing strategies — comes into focus. Exporting the product to Germany is viewed as the most viable method of market entry, a conclusion borne out by an examination of the country's current level of industrialization and economic openness.

Germany currently has a population of just under eighty-two million people, with the vast majority — over ninety percent — identifying as ethnic Germans. The country does have sizeable minority populations, however, having long been a preferred immigrant destination due to its work opportunities, strongly supported social programs, and a highly ranked educational system. Population growth has been very low over the past decade, and nearly two-thirds of the current population falls between the ages of fifteen and sixty-four. Three-quarters of the country's population live in urban areas.

Environmental Factors

With Europe's largest economy and the fifth largest in the world, there is considerable economic capacity in Germany. Only eleven percent of the population lives at or below the poverty line, the top ten percent of earners control just twenty-four percent of the nation's wealth, and a large and dominant middle class comprises more than half the country. These conditions create a consumer base with both the means and the inclination to consider premium or differentiated products.

Germany's government has been remarkably stable given its twentieth-century history, particularly since the reunification of East and West Germany. The democratic system now in place allows for a great deal of economic freedom while carefully regulating consumer safety and ethical practices. The country is also relatively open to foreign direct investment, though its export surplus and still-strong industrial sector leave limited room for foreign producers to establish domestic operations. As one of the earliest members of the European Union and an adopter of the Euro as its official currency, Germany is well positioned for intra-European commerce and currency convertibility.

The country also has a very well-developed transportation infrastructure, which supports the continued importing and exporting of goods at major scales and facilitates intrastate commerce. All of these factors contribute to a per-capita GDP estimated at over thirty-four thousand dollars as of 2009. GDP growth was relatively stagnant in the preceding years but was expected to improve as the global economy recovered. Communication infrastructure is comparable to that found in North America, with near-total coverage of fixed and wireless telephones and the majority of the population regularly using the Internet.

Strategic Research

Toilet paper is a product used by virtually everyone in modern society, and as a result the potential market size for biodegradable toilet paper in Germany is limited, for all practical purposes, only by the size of the German population. As an offering that is highly differentiated from conventional products, biodegradable toilet paper carries a distinct advantage over competitors insofar as it is visibly and meaningfully different from standard rolls. At the same time, the unfamiliarity of the new product may be off-putting for some German consumers. With a commodity that is both universally necessary and cheaply available, there is little opportunity to create entirely new demand or expand the overall market; differentiation is therefore the key selling point.

The environmental sensibilities of the average German consumer are likely to be a major factor in purchasing decisions. Germany has a well-documented culture of environmental consciousness, and consumers there have shown consistent willingness to pay a premium for products that align with sustainability values. This positions biodegradable toilet paper favorably relative to conventional alternatives.

Conclusion

Theories of market entry have a great deal of applicability to real-world situations, and this analysis made many of these connections quite clear. The success of different market entry modes is highly dependent on the specific details of the market being entered and the product being offered. Examining a real-world scenario using actual demographic and environmental data makes these dependencies — and the differences among various strategies — highly visible. Other theoretical frameworks might suggest different approaches, but those applied here prove to be highly relevant and practically useful for assessing the prospects of introducing biodegradable toilet paper to Germany.