Price International Marketing Strategy by yaosaigeng


									International Marketing Strategy Project:
Country Market Analysis

    Skippy in the U.S.
• Positioning:
  – Family oriented
  – Nutritious alternative
  – Fun for kids
     • new packaging and snack bars
• Target market: Families with young children
• Distribution: sold to grocery chains, convenient
  stores, and mass retailers from one central
    Implications for Skippy in India
• Will consumers like the taste or will it have to
  be altered?
• Will consumers be able to afford the product
  and what price must it sell at to be successful?
• Where will consumers buy the product and
  how will the product get to the selling
• How will consumers find out about Skippy and
  how will ads have to be changed?
  • Would it work in India?
  • 4Ps
     – Price: Retail Price
     – Place: Production, Distribution,
       Warehousing, Retailers
     – Product: Ingredients, Packaging
     – Promotion: Types, Message
    Price: Retail Price
• In U.S., avg. price of 18 oz. jar: $2.50
   – In India, that would be about 114 rupees
• But in 2002, a bottle of soda cost 10 rupees,
  about $0.22.
• Economic factors
   – Top 20% of households have income of $2800 /
     year or greater
      • About 128,000 rupees
   – Top 2% (20 million) have income of $13,000 / year
      • About 594,000 rupees
   Price: Retail Price
• Legal Factors
  – Tariffs can reach up to 25%
• Cultural Factors
  – Bartering / Negotiating can lower prices
• Overall, price must be lower in India than
  in U.S.
     Place: Production
• Currently, Skippy only produces its products out of
  Little Rock, Arkansas
  – For both domestic and international sales
  – Product must be held for 24 hrs. to settle before being
    sent to one of Unilever’s 7 distribution centers in the
    U.S. and 19 countries as well
   Place: Production
• Legal Factors for shipping from U.S.
  – Very few quantitative regulations
  – Tariffs up to 25% on imports (but India
    continuing to decrease tariffs to meet WTO
  – Avg. tariffs on U.S. companies: 15%
  – U.S. and India not part of any multinational
    trade agreement
  – No licensing fee for food items
   Place: Production

• Cultural Factors
  – Indians favor use of local labor and joint
• Technology Factors
  – Unilever already has the facilities to produce
    in India if they so choose
   Place: Production
• Infrastructure Factors
  – Hindustan Lever Ltd., Indian subsidiary of
    Unilever already has 100 factories and
    research facilities in India (Also one of the
    largest and most respected companies in
  – Unilever already produces products like
    Lipton Iced tea there
   Place: Production
• Economic Factors
  – State to state tariffs if produced in India
  – Cheaper labor in India

                                          Note: These
                                          folks are not
                                          making peanut
  Place: Distribution
• Transportation
  – Infrastructure Factors
    • Developing new national 4-lane highway
    • Only 58,000km (36,039 miles) of road usable
      for high speed traffic
       – 3,000,000km of road with only half paved
    • 232 paved airports but only 10 are profitable
    • Rail very expensive to move product because
      of high tariffs
       – 63,000km of rail with new system in development
    • Outdated sea ports
     Place: Distribution
• Transportation Examples
    Place: Warehousing
• Technology Factors
     • Hindustan Lever, Ltd. Uses JIT system called RSNet,
       internet-based network to connect warehouses and
• Infrastructure Factors
  – Mother Depots: warehouses that stock
    manufactured goods to be sold in given region
     • Stocked weekly or bi-weekly
  – Single channel distribution plants for rural areas
     • Villagers come to plants to pick up goods
    Place: Retailers
• Currently in the U.S., Skippy is available in
  most groceries stores, convenient stores, and
  mass retailers
• Infrastructure Factors
  – 12,000,000 retailers, very few national chains
  – Mostly mom and pop stores
     • Retail outlets almost always locally owned
  – Large groceries targeted to ex-patriots and upper-
    class Indians
  – Most cities have well-known market districts
  – Although many villages have satellite TV, getting
    product to rural markets can be huge challenge
Place: Retailers
   Place: Retailers
• Competition Factors
  – Planters peanut butter and an Australian
    brand sold in India
  – Chutney, used as a spread, may be a
    possible competition
    • Skippy could possibly copy positioning in retail

   Product: Ingredients
• Currently in U.S.…
  – Skippy has 6 flavors of peanut butter as well as
    snack bars and squeeze sticks
  – In U.S., peanut butter must have 90% peanuts
• India second largest exporter of peanuts in
  the world (Skippy gets most of its peanuts in
  the U.S.)
  – 24.5% of world production
• Legal Factors
  – Imported and domestic food products must be
    subjected to provisions of India’s Food
    Adulteration Acts
  – Copies of act can be obtained for $25 or 1175
    rupees at your local Indian bookstore
    Product: Ingredients
• Cultural Factors
  – Indians prefer savory vs. sweet foods
  – Many Indian foods have numerous spices
  – Indians prefer fresh and nutritious, healthy
    foods and many foods consumed are
  – There exists a large focus on vegetarian
    diets (as emphasized through religious
    teachings and practices)
  – Peanuts used in a lot of Indian cooking
    Product: Packaging
• Recently, Skippy has updated its packaging
  with a new vibrant and upbeat design
  – Maintained the color schemes
    and big red Skippy logo

  – Incorporated new,
    family-friendly cartoon
    character, Skip.
• Legal Factors
  – Packaging must have Hindi along with English on
    the label
   Product: Packaging
• Cultural Factors
  – Literacy rate of 65% in 2001
  – Numerous religious symbols and colors
  – Ganesha: Elephant God…maybe avoid “The
    Nutshells,” the Skippy elephant band
   Product: Packaging
• Consumer Behavior Factors
  – Due to limited storage space and frequency
    of shopping habits the jars of peanut better
    are currently too large for the market

        Too big!!
   Promotion: Types
• Currently in all main categories (Unilever
  spent $9.3 million on Skippy last year)
  – Also promotions like….
     •   Endorsement by Derek Jeter
     •   Product placement in Nickelodeon productions
     •   The Skippy “Nutshells” elephant band
     •   Several charity promotions
     •   “America’s Nuttiest Family” contest
    Promotion: Types
• America’s Nuttiest Family: The Hurds
    Promotion: Types
• India’s Nuttiest Family: The Patels?
   Promotion: Types

• In India…
  – Media availability has increased
  – Competition is unlimited
  – Budgets are large
  – Expectations of advertising are high
    Promotion: Types

• Hindustan Lever
  – Largest advertiser (6,966 mill Rs in 2001)
     • Largest in every category but print media
  – Most admired company
  – Top marketer
• Indian Advertising Expenditure by Medium (US$
  TV         Print         Radio        Cinema Outdoor
 777.3       894.5          46.6           7.2     134.9
   Promotion: Types (TV)

• 75% household penetration
  – Color TV: 35.7%
  – Cable: 49.0%
• Legal Factors
  – No wholly political or religious ads
  – For children: “Ads must not suggest that,
    unless children buy (or encourage others to
    buy) the advertised product or service, they
    will be failing in their duty or lacking in loyalty
    to any person or organization.”
    Promotion: Types (TV)
• Cultural Factors
  – All media available in English, Hindi, and variety of
    regional languages
  – May be criticized on grounds of deception,
    manipulation, bad taste
  – For rural areas (70% of pop.) creating brand
    awareness most important
• Technology Factors
  – Same media outlets available in India as in U.S.
  – Increase in satellite and cable TV
• Economic Factors
  – Peak rate for 30sec
     • 18,000 to 1,200,000 Rs ($400 to $26,000)
   Promotion: Types (Print)
• Print media reaches 70% urban adults
• Infrastructure Factors
  – Nearly all controlled by private sector
  – Ads available in daily newspapers, weekly
    and monthly business magazines, news
    magazines and industry-specific magazines
  – Total circulation of newspapers (‘000):
   Promotion: Types (Print)
• Economic Factors
  – Full page color ad (Newspaper):
    • Min: 76,960 Rs
    • Max: 22,340,000 Rs
  – Full page color ad (Magazine):
    • Min:7,000 Rs
    • Max: 530,000 Rs
    Promotion: Types (Radio)
• Gov’t owned All India Radio reaches 90%
  of pop.
• Hindustan Lever: top radio advertiser
• Infrastructure Factors
  – Private radio, limited to FM music channels,
    only available in a few cities
• Economic Factors
  – Peak rate for 30sec
    • 15,000 to 21,000 Rs ($330 to $460)
   Promotion: Types (Internet)
• Homes with internet (2002): 600,000
• Adults with internet access (2002):
  6,500,000 (1.0%)
• Economic Factors
  – Most cost efficient
     • Rates from $227 per month to $2,272 per month
   Promotion: Message
• Currently…
  – Targeted towards children and moms with
    cartoon imagery and “food as fun”
  – Use of Skip
  – “If you’re going to sell to children, you have
    to target them because today’s moms ask
    their kids what they want” -- Youth-marketing
    advertising consultant
   Promotion: Message
• Legal Factors
  – Must be careful with ads directed at children
• Cultural Factors
  – Skip: blond haired white kid who surfs
  – Is food fun in India???
• Low income affects pricing but population
  is a key asset
• Presence of Hindustan Lever Limited and
  available facilities
• Limited competition
• Poor infrastructure
• Large reach of TV and print advertising
India, Now...
India, Post Skippy invasion…
   •   James Corbello
   •   Lindsay Johnson
   •   David Lindvall
   •   Brent Wakley

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