International Marketing Strategy Project: Country Market Analysis

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International Marketing Strategy Project Country
Market Analysis

• India

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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
  manufacturer

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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 locations?
• How will consumers find out about Skippy and how
  will ads have to be changed?

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Agenda

• Would it work in India?
• 4Ps
• Price Retail Price
• Place Production, Distribution, Warehousing,
  Retailers
• Product Ingredients, Packaging
• Promotion Types, Message

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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

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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.

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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 Unilevers 7 distribution
  centers in the U.S. and 19 countries as well

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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
  guidelines)
• Avg. tariffs on U.S. companies 15
• U.S. and India not part of any multinational
  trade agreement
• No licensing fee for food items

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Place Production

• Cultural Factors
• Indians favor use of local labor and joint
  ventures
• Technology Factors
• Unilever already has the facilities to produce in
  India if they so choose

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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 India)
• Unilever already produces products like Lipton
  Iced tea there

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Place Production

• Economic Factors
• State to state tariffs if produced in India
• Cheaper labor in India

Note These folks are not making peanut butter
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Place Distribution

• Transportation
• Infrastructure Factors
• Developing new national 4-lane highway system
• 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

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Place Distribution

• Transportation Examples

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Place Warehousing

• Technology Factors
• Hindustan Lever, Ltd. Uses JIT system called
  RSNet, internet-based network to connect
  warehouses and manufacturers
• 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

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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

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Place Retailers
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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
  markets

vs.
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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 Indias Food
  Adulteration Acts
• Copies of act can be obtained for 25 or 1175
  rupees at your local Indian bookstore

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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 homemade
• There exists a large focus on vegetarian diets
  (as emphasized through religious teachings and
  practices)
• Peanuts used in a lot of Indian cooking

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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

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Product Packaging

• Cultural Factors
• Literacy rate of 65 in 2001
• Numerous religious symbols and colors
• Ganesha Elephant Godmaybe avoid The
  Nutshells, the Skippy elephant band

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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!!
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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
• Americas Nuttiest Family contest

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Promotion Types

• Americas Nuttiest Family The Hurds

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Promotion Types

• Indias Nuttiest Family

The Patels?
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Promotion Types

• In India
• Media availability has increased exponentially
• Competition is unlimited
• Budgets are large
• Expectations of advertising are high

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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
  million)

TV Print Radio Cinema Outdoor
777.3 894.5 46.6 7.2 134.9
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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.

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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)

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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) 39,676

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Promotion Types (Print)

• Economic Factors
• Full page color ad (Newspaper)
• Min 76,960 Rs
• Max 22,340,000 Rs
• Full page color ad (Magazine)
• Min7,000 Rs
• Max 530,000 Rs

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Promotion Types (Radio)

• Govt 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)

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Promotion Types (Internet)

• Homes with internet (2002) 600,000 (0.3)
• 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

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Promotion Message

• Currently
• Targeted towards children and moms with cartoon
  imagery and food as fun
• Use of Skip
• If youre going to sell to children, you have to
  target them because todays moms ask their kids
  what they want -- Youth-marketing advertising
  consultant

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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???

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Considerations

• 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

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India, Now...
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India, Post Skippy invasion
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Questions?

• James Corbello
• Lindsay Johnson
• David Lindvall
• Brent Wakley