International Marketing Strategy

International Marketing Strategy Lauren Colvin Patrick Lynch Megan Revoldt Kate Turkcan

International Entry • Identify a target market in the UK • Adapt the product to fit target market preferences • Design a supply chain that accounts for production and distribution • Implement a communications strategy to reach target market and induce trial of product

Segmenting the Market • 20—29 age group • Metropolitan • University students • Young professionals, single • Need for convenient and inexpensive food option • Parents • Metropolitan & Suburban • Middle to Upper class • Young children—Age distribution between 5—14: 7,581,000 • Age distribution between 25—39: 12,915,000 • Influenced by children • 60+ age group • Retired • Need for convenient food options

20—29 Age Group Age distribution: 7,599,000 people Single, working professionals Students attending universities Fast-paced lifestyle Seeking convenient, inexpensive alternatives to eating out and cooking Very brand conscious – developed at an early age The “Student Pound” ≈ £14 billion annually = $26,864,766,335 43% of 18 – 24 year olds experience a form of higher education Spend a good deal of time… At pubs and bars At the cinema In restaurants (mostly fast food) Participating in sports Target Market

Target Market • VALS 2 Category • Experiencers • Young and compulsive • Excited about new products that will give them the edge, or new experience they desire

Target Market • PRIZM Segments • Young Influencials • Traditionally referred to as “yuppies” • Middleburbs, college graduates, young professionals • Up and Comers • City centers, more mature, athletic activities, and night life • Boomtown Singles • 2nd city, young working class, high value on functional and convenient things in their lives

Adapting Uncrustables to the Market • Modifying product to meet consumers preferences in the UK • Replace current peanut butter & jelly and grilled cheese filling with the combined ingredients: pizza sauce, cheese and pepperoni • 60% of frozen pizza sales—cheese and pepperoni • Replace white bread with thin layer of pizza dough • Pizza is one of the nation’s top 10 most frequently consumed foods.

Marketing Objectives • Expected Sales (dollars and units): • Frozen pizza sales US—2004: $2,782,254,592 • Uncrustables sales US—2004: $27,500,000 • Ratio 10.12 / 1 • To account for first-year product introduction in a new market, estimated sales will be 2% of UK frozen pizza sales • Frozen pizza sales in the UK—2004: $645,478,720.95 • $645,478,720.95 (.02) = $12,909,574.42 • Estimated retail price = $3.44 per unit • Total units sold = 3,752,783

Marketing Objectives • Extent of Market Penetration • Population of Target Market = 7,599,000 • Objective is to induce trial and repeated purchase in 15% of target market. • 7,599,000 (0.15) = 1,139,850 consumers • In order to reach expected sales value, each of the 1,139,850 consumers will have to spend approximately $10 on the product in 1 year

Brand Equity & Positioning • Creating a strategic alliance with Goodfella’s Pizza, produced by Green Isle Foods and owned by Northern Food Plc • Goodfella’s is the leading frozen pizza brand in the UK—owning 23% of the market. • 2004 sales--$148,472,836.31 • Average price range per unit—£1.94—£2.99 ($3.69—$5.69) • Positioned as a quality pizza, made with the finest ingredients and designed to create a fresh-baked pizza experience in your own home.

Brand Equity and Positioning • Partnership Agreement • Green Isle Foods responsible for producing product in Naas facility • Smucker’s responsible for contracting distribution and storage • Specific marketing team responsible for the co-branding of product • Coordinate strategy consistent with Goodfella’s and Smucker’s image and reputation

Brand Equity & Positioning • Top competitors: • Chicago Town Pizza—owned by Schwan’s (US) • 2004 sales--$109,435,758 • Dr. Oetker Pizza—family owned enterprise (GR) • 2004 sales--$53,852,413.24 • Positioned against the competition—Goodfella’s Stuffed Pizza Pocket are an affordable, convenient, on- the-go, single serving of that great pizza taste that you expect from Goodfella’s.

Product & Branding Decisions • Brand Name • Goodfella’s Stuffed Pizza Pocket • Product Decisions • Important factors: • Convenience • Taste • Price • Cooking method • Portion size

Core Product Decisions • Stuffed Pizza Pocket • 6 inch diameter • Round in shape (like a small baked pie) • Thin layer of pizza dough stuffed with pepperoni, mozzarella and provolone cheese, Goodfella’s specialty sauce and sprinkled with parsley

Packaging Decisions • Packaging Materials for Stuffed Pizza Pocket • Cardboard box • 1 stuffed pizza pocket wrapped in plastic • Package Design • Rectangular box • Size takes into consideration small freezers in the UK • Package Colors • Primarily red, white and green—consistent with Italian cuisine

Content Brand Name Visual of Stuffed Pizza Pocket Nutritional Information Ingredient List Preparation Instructions Shelf Life Storage Conditions Contact information for Green Isle Foods Place of Origin Bar Code Labeling Decisions

Distribution Decisions • Manufacture of Product • Green Isle Foods—wholly owned subsidiary of Northern Foods plc • One of the UK’s largest food manufacturers • Produce frozen convenience foods for the Irish and UK retail markets

Distribution Decisions • Green Isle Foods operates facilities in Ireland • State-of-the-art manufacturing technology in plants • Described as a “specialist in food conversion / assembly, with manufacturing capability as its core competence.” • Flagship facility for pizza is the plant in Naas, Co. Kildare • Recently expanded under a £25 million investment project—incorporated the most advanced baking, topping and packaging technology.

Distribution Decisions • Distribution of Product • McBurney Refrigeration Ltd • Full range of refrigeration haulage • Depots in Dublin and Liverpool • Cold storage and chilled food distribution center on a 12 acre site in Liverpool to service increasing food import traffic from Ireland

Distribution Costs • Trucking from production facility in Naas to port in Dublin (17 miles) • $2.11 per mile (17 miles) x 2 for refrigeration = $71.74 • Round trip = $143.48 per truck • Each truck can hold 10,000 lbs • One box = 0.8 lbs • Each truck can transport 12,500 boxes • Need to transport 308,430 boxes per month • 308,430/12,500 = 25 trucks per month • 25 trucks x $143.48 = $3,587 month x 12 = $43,044 • $43,044 + 34% markup = $57,679 per year • Source: Freight Transport Association of UK

Distribution Decisions • Distribution of Product • Dublin Port Company • “The Gateway between Ireland and the World” • Principal port in the Republic of Ireland • Positioned at the hub of national road and rail network • Has terminals and facilities to the highest industry standards

Distribution Decisions • Distribution of Product • Derek Horner Agencies Ltd. • Customs clearance is performed in-house • Full port agency services • Containers provided to suit all types of cargo • Temperature controlled containers • 1 sailing weekly from Dublin to Liverpool

Distribution Costs • Ferry from Dublin to Liverpool • 6 trucks per week holding 60,000 lbs of product • Shipping 60,000 lbs = $22,800 • Includes refrigeration and markup • $22,800 x 52 weeks per year = $1,185,600 per year

Retail Distribution Regions • Shipping to 12 regions throughout the UK • Each region maintains 100 trucks, which operate through a centralized warehouse equipped with frozen storage facilities • Trucks then disperse to assigned retail outlets using a “just-in-time” inventory system

Distribution Decisions • Retail Outlets within UK regions • Tesco—10 depots supply to 779 stores • Somerfield—15 depotssupply to 1,275 stores • Sainsbury—12 chilled depots supply to 498 stores • ASDA—19 depots supply to 258 stores • Safeway—18 depots supply to 481 stores

Distribution Costs • Trucking from Liverpool to regions, then regions to retail outlets • 1,200 trucks total • Cost per truck = $1,564 • $1,564 x 1,200 trucks = $1,876,800 per year • Storage costs throughout the 12 regions • $10,000 per warehouse in each region x 12 regions = $120,000 (markup and refrigeration included) per year

Total Costs—per unit • Production costs: 15% of $2.50 retail price (US) = $0.38 • Truck from Naas to Dublin: $0.02 • Ferry from Dublin to Liverpool: $0.32 • Trucking throughout UK: $0.50 • Storage in UK: $0.03 • Total cost per unit: $1.25 • 50% markup • Total revenue: $1.87 • 60% markup $1.12 • Retail before tax $2.99 • 15% markup $0.45 • Retail after VAT $3.44 = £1.80

Promotional Budget • Profit per unit = $0.62 • Total profit = $2,326,725 • Northern Foods receives 55% of the profits • 35% of profits go towards compensation for production costs which are 30% of the total costs • Payment for use of Goodfella’s brand name = 20% of profits • Northern Foods profits = $1,279,699 • Smucker’s profits: $1,047,026

Promotions Decisions • Communication Objectives: • Create awareness of the Goodfella’s Stuffed Pizza Pocket among 25% of the population between the age of 20—29, specifically those in need of a convenient, affordable and quality product within one year. • We hope to stimulate trial among 15% of target population.

Promotions Decisions • Overall Message • Stuffed Pizza Pocket is an affordable, easy to prepare and consume product for those on-the-go and time-constrained members of the target market. • Purpose of the product—make the daily hassles of cooking less of a burden for the target market. Allows them to focus their energies elsewhere. The size and quantity of the product make it a reasonable substitute for a traditional meal.

Promotional Decisions • Creative Strategy • Deliver clear, compelling message • Emphasize what is important to target market • This age group cares about saving money • Consistent message • The Big Idea • “Keeps you and your wallet stuffed”

Media Vehicles • Outdoor Advertising—91% of promotional budget • $952,794 • Objective: Create awareness and stimulate interest in product among the target market • Reach and Impact • Increases product credibility • Strategically placed in high traffic areas and easily viewed • Creative and memorable

Media Vehicles • Outdoor Advertising • Billboards • Contract with ClearChannel Billboards • Purchase campaign type “National Cover A” which allows for 100 billboards throughout the UK • The budget will not allow for continual display of billboards throughout the one year period • Billboards will appear at the introduction of the product to create awareness and will reappear throughout the year to serve as a reminder to the target market • Billboard expenditure: $688,745

Media Vehicles • Outdoor Advertising • Ambient Media Expenditure: $264,049 • Viacom Media offers general site packages for Tube display

Media Vehicles • Sales Promotions—9% of promotional budget • Objective—to engage and motivate potential buyers • Supplementing advertising and facilitating personal selling—promotional giveaways • Goodfella’s and Smucker’s brand reps distribute t-shirts at local pubs/bars in each region • 12,000 t-shirts x $0.33 ea. = $3,960 per month • Annual cost: $47,520 • Generate buzz and word-of-mouth • Sales promotion expenditures: $47,520

Media Vehicles • Public Relations • Objective—to promote a positive image, generate publicity and foster goodwill • Promotion on Green Isle Foods website • Promotes that product is available and relatively inexpensive method of communication • Other Examples—media coverage, hosting special events and sponsoring charitable campaigns • Disadvantages—cost, lack of control • Not feasible at this time beyond website publicity

Media Vehicles • Direct Marketing • Objective—this form of advertising is aimed directly at target consumers, usually in their homes, attempt to get them to take action • Examples—catalogs, coupon mailers and letters are common forms of direct marketing • Not an effective approach to reaching target • Not feasible at this time

Media Vehicles • Event Sponsorship • Objective—opportunity to reach niche market, create awareness and enhance image • Relatively new product and Insufficient funds • Not feasible at this time

Media Vehicles • Advertising • Any paid form of media communication • Television—high absolute cost, high production cost, short message life • Radio—low attention getting, audio only • Print • Magazines—long lead time for placement, visual only • Newspapers—poor reproduction quality, selective reader exposure • Disadvantages—cost, lack of feedback • Not feasible at this time—will pursue options upon growth of product

Summary • Target market—20-29 years old • Strategic alliance with Goodfella’s Pizza (Northern Foods plc) • Stuffed Pizza Pocket – “Keeps you and your wallet stuffed” • Produced in Ireland and distributed throughout 12 UK regions • Product promoted through outdoor advertising, ambient media and sales promotions

International Marketing Strategy