Image by: i-ehow com Great Foods, Inc.’s Going International with QueRico! By Emily A. Neary For Mr. Sam Romero, Founder



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Great Foods, Inc.’s

Going International with QueRico!

By

Emily A. Neary

For

Mr. Sam Romero, Founder

& the Executive Staff at

Great Foods, Inc.


April 17, 2009

Executive Summary
This report deals with all of the elemental factors in expanding our QueRico! Sauce product overseas. This is Great Food’s Inc.’s first international venture, and as such; we’ve conducted a lot of research.

Here in this report we have outlined the findings of our research, and our decisions on exporting our product abroad.

Below you will find a brief introduction, as well as our Mission Statement and the country we will first have as our host region for exportation.

We then discuss our competition environment as well as our strategies concerning our target market, product strategy, distribution, communication (marketing) and pricing.

The report concludes with our perceptions and expectations about expanding our company in into the international market.

Introduction

Our founder Sammy Romero has been a successful entrepreneur in Mexican cuisine starting out in 1975 in San Antonio, Texas, where he owned El Cocinero Loco, a small Mexican Restaurant in the Western part of the city. The Restaurant itself eventually closed shop; but this wasn’t the end of Great Foods Inc.! Mr. Romero continued on focusing on the popular sauce that made his business successful thus far.


By 1995, Great Foods, Inc. had quite a portfolio list with regional clients in various states including Texas, New Mexico, Louisiana and Oklahoma. The main clients were mostly small local grocery and large regional company chains.

Since 2000, Great Foods, Inc. has received a number of unsolicited inquiries about the new snack versions of the company’s QueRico! Mexican sauce from all over the world. This has given the Company the idea to branch overseas and look for an international market as well as the successful domestic market it currently possesses.


As such, I have been hired to work with executive Annette Santiago to conduct research and to create an international marketing plan for our QueRico! Brand of snack sauce.
Below are our findings and initial marketing strategies.

Mission Statement

The mission of our company, Great Foods, Inc., is to provide our domestic and international consumers with Mexican Sauces of the highest quality and made with the finest ingredients, as well as to continue to meet the ever-changing demands of our consumers and the industries that purchase our products.



Country Market Selection

After conducting some research with marketing experts in similar industries, we have concluded that the entry strategy for the international arena will be exportation.

Based upon the large numbers of unsolicited inquiries from the past five years, as well as extensive gathering of research by media reports and political risk reports; we have determined that the countries of Australia, Brazil, France, the UK and Japan will have the greatest potential to accept our brand of snack sauces.

Below are the criteria we decided upon to select the best country for our initial international expansion:



  1. Population : (Size & Growth Rate)

  2. Culture: (Language & Religion)

  3. Trade: (Trade Agreements & Tariffs)

  4. Economy: (GDP Per Capita; GDP Purchasing Power Parity; Inflation).
    Below is our table matrix that outlines the findings of the criteria we selected. We have ranked each category from 1 to 6, with 1 equaling the least; and 6 equaling the best for each category.


COUNTRY SELECTION MATRIX

(Data Collected from Central Intelligence Agency (CIA) Factbook, March 19, 2009) & Export.gov, (2009)

Factors

Population

 

 

 

Culture

 

 

 

Trade

 

 

 

Economy

 

 

 

 

Tot

 

Size

R

Growth Rt.

R

Religion

R

Language

R

Agrmt

R

Tariffs

R

GDP/Pcap

R

GDP/PPP

R

Inflation

R

TotR

 

 

 

 

 

 

 

 

 

 

 

Max

 

 

 

 

 

 

 

 

Aust.

21,262,641

1

1.20%

6

Christian

6

English

6

Yes

5

10%

4

$39,300

5

$824.9 billion

1

4.70%

2

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brazil

198,739,269

5

1.20%

6

Catholic

6

Portuguese

2

No

2

15%

3

$10,300

1

$2.03 tril

2

5.80%

1

3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

64,057,792

3

0.55%

3

Catholic

6

French

2

No

2

19%

1

$32,700

2

$2.097 trillion

3

1%

6

3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UK

61,113,205

2

0.28%

2

Christian

6

English

6

No

2

18%

2

$37,400

4

$2.281 trillion

4

3.80%

4

3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Japan

127,078,679

4

-0.191

1

Buddhist

4

Japanese

2

No

4

5%

5

$35,300

3

$4.487 trillion

5

1.80%

5

3.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

307,212,123

6

0.98%

5

Christian

6

English

6

N/A

6

N/A

6

$48,000

6

$14.58 trillion

6

4.20%

3

5.5



(CIA World Factbook, March 19, 2009) (Export.gov, 2009)
After gathering all the information from the data, we find that Australia is the most attractive country to begin with exporting our Mexican sauce products with an overall rating of 4, which is only after the U.S. at 5.5.

Before conducting the vast research, one might have thought of Brazil as the most attractive, because of their likeness to Hispanic culture and large population.

Though Australia’s population rate is low and their inflation rate is high, we find that this country rated very high in other factors which are of large importance when considering exporting overseas; and gave them the largest overall rating.

Firstly, they are one of only fourteen nations (and the only country of this group) that has a valuable across the board free trade agreement with the United States. The U.S. – Australia Free Trade Agreement is the first FTA with the U.S. and a developed nation since the Canada-U.S. FTA in 1988. (ustr.gov, 2009). Australia is a growing and large investment partner of the U.S., and as of 2003 was the U.S.’ fourteenth largest export market for goods. (ustr.gov, 2009).

Also, tariffs in Australia were lower than most (only higher than Japan). Further, they were rated with the highest GDP-Per Capita (only lower than the United States). And lastly, their culture is similar to the U.S., in that they are native English speakers and are a majority of Christians – which surprisingly does affect the success of failure of an exported product.

Competitive Environment

There are a wide variety of spreads and sauces that are currently marketed and distributed in Australia. Some of these include sauces such as carbonara, bechamel, chili, mushroom and steak sauces. (gffoodservice.com, 2007)

There are currently several competitors that market and produce sauces in Australia. Some of these brands include, Australian Native Produce Industries Pty (Leggo Sauces), Knorr Sauces, Marron Marketing Australia and Campbell Sauce Company. The good news is that even though these companies make nice tasting products, none of them make an authentic Mexican salsa-type sauce. (about-australia-shop, 2009)

Below is a table identifying some of the local and foreign direct and indirect competitors within our product category.


Direct & Indirect Competition




Direct Competitors

Indirect Competitors

Local Competitors

Leggo’s Sauce, Eta Barbecue Sauce,

Gravox,

Foreign Competitors

Masterfoods, Kraft, Knorr, Cambells.

Marmite, Kantong, Golden Syrup, Fountain Sauce, Cottees. Capilano,


Target Market

Since this is our first venture overseas, we have decided to test the waters and have selected the first target market for our QuéRico sauce to be the Mexicans residing in Australia. Currently, the largest population of Mexican Australians reside in the two cities of Melbourne and Sydney. As such, this is the area where we will originally target.

The reason for targeting the Mexican Australian population is obvious in that this group already has a taste for Mexican Sauces and will be open to trying them. And by targeting Melbourne and Sydney, we will also be inadvertently exposing our product to a large populated area of other ethnicities.  


Product Strategy

Our strategy will be to use direct marketing through retailers that are located in areas that are frequented by the Mexican Australian population.  

The areas we will seek to focus on in Sydney are Carlton, Coogee, East Sydney, Ashfield and Kingsford. The area in Melbourne that is most frequented by Mexican Australians is North Wickham.  We have chosen these areas because Mexican Australians frequent them for dining and shopping. There are many Mexican restaurants in these areas, and as such, are a big draw for Mexican Australians.
Aside from the restaurants, the Mexican retail and grocer shops in these areas sell sauces, and it is likely this group will also purchase our tasty sauce.

In general, the eating habits of sauces like QueRico! in Australia are used as dips and dressings as well as accompanying different variations of food like baked vegetables and roasts. 

We have decided to stay with standardization with respect to our product and will market the sauce in jars. In addition, we will also produce a “fresh refrigerated” version that will be exported in plastic containers.
Distribution Strategy

Our distribution plan will be direct distribution through the channel of retailers that are located in the above described areas. These retailers will include grocery stores, mom and pop restaurants, as well as department and discount stores.

 

We will begin our promotions through posters and banners displayed throughout the establishments in the area, as well as have point-of-purchase display units that will highlight our sauce.



Communication Strategy

In addition to our product strategy, we have also decided to use a standardized approach with our marketing campaign. There are several reasons for this approach. If we are targeting the Mexican Australian consumers in Australia-they will be looking for an authentic Mexican flavor, and not one adapted for the regular Australian population. Further, our sauce will be in a better place as far as competition goes since our sauce taste close to home, and this is currently lacking in our host country.


Domestically, our sauces are jarred, tinned and sometimes bottled. This is packaging that can be easily exported to Australia while maintaining the authentic taste of the sauce and maintain its freshness.
For our target market of Mexican Australians, we feel that our QueRico! sauce will be most successful if we keep its exact same taste and consistency as is done here in the U.S. We also feel that our current domestic advertising campaign will appeal to our target market of Mexican Australians. And as such, we should go with the standardized approach.
The secondary reasons for standardization are for cost and expediency purposes. This is the first time out of the gate for us in exportation, and we feel that the standardization approach best suits our needs for this particular target market.

As we eventually branch out to the non-Mexican Australians, we will revisit the approach, and perhaps adopt a bit of both methods so as to appeal to all markets involved.



Branding
The key to our Brand core strategy and value of proposition is to get the message out to our consumers that:

  • QueRico! will provide them with the most authentic Mexican salsa in all of Australia.

  • QueRico! will allow Mexican Australians to get an actual taste of their homeland.

QueRico! will be made from the finest and freshest ingredients made from San Antonio.

Outlined below is our core value proposition strategy:



  • QueRico! will provide its consumers the most authentic Mexican salsa in Australia.

  • QueRico!! will give Mexican Australians the chance to enjoy the taste of Mexico in Australia.

  • QueRico! Will be fresh, made from the finest and freshest ingredients from and original recipe.

  • QueRico! will also enable Australians to experience the taste of the best Mexican sauces made in USA.

Positioning is also an important factor to consider in our communication strategy to our target consumers. We have learned from our previous research that there quite a wide variety of spreads and sauces that are currently being marketed and distributed in our host country of Australia. However, and as stated earlier above, the good news is that even though these companies produce nice tasting sauces, none of them make a fresh authentic Mexican flavor salsa-type sauce. As such, this will be our focus when positioning ourselves against the competition.
The positioning of QueRico! will be to market the product based upon:

  • QueRico! To be the only true authentic Mexican sauce available in the Australian Market. Better quality and more fresh than some other imported “Mexican sauces” available in Australia.

  • QueRico! is reasonably priced for the high quality of the product.

Culture

Our company realizes that the culture of our target market of Mexican Australians is different than the native Australians. As such, and even though we are first focusing on the Mexican Australian population, we realize that the native population will also be exposed to QueRico! For this reason, we want to first stress upon the authenticity of Mexican flavor for our target market, but also boast of its great flavor and fine ingredients for the rest of the population. We feel this will be the best strategy to have one initial advertising campaign, but to reach a market that will be saturated with two cultures combined.


Our communication strategy focusing on cultural factors are:

  • Mexican Australians will appreciate authentic taste, freshness and quality ingredients.

  • Australians will appreciate the fresh ingredients and taste in a manner in which the sauce will be compatible with Australian cuisine.

  • Mexican Australians will have to be targeted with authentic Mexican taste.

  • Australians will have to be targeted with fresh & great tasting salsa suitable for Australian food.

Our top three Media Vehicles for rolling out our marketing campaign are:

  1. Posters and banners displayed throughout the establishments in the targeted area of Sydney and Melbourne.

  2. Discount coupons on QueRico! in restaurants and stores located in Mexican frequented areas in Sydney and Melbourne.

  3. Have point-of-purchase display units that will highlight our sauce.

As outlined above, our first media vehicle will be the use of posters and banners displayed throughout the establishments selected in our target areas of Sydney and Melbourne. We feel this will enable our product to be visible to not only the Mexican Australians we are targeting, but also everyone else who frequents the areas where our posters and banners are displayed.
Secondly, we feel that discount coupons are a great way to convince consumers who may otherwise not want to give our product a try, an incentive to buy the sauce. After all, everyone loves a bargain, and there are a great number of consumers who won’t be able to resist!
Thirdly, having the point-of-purchase display units will get those last minute compulsive shoppers to give the sauce a try. It may not have been their plan to buy the sauce until they see the advertisement and product in the stores.
1..Below is our preliminary design for our posters and banners.
(Images by: stainlesssteeldroppings.com & frankston.voc.gov.au)




2. Next is our campaign visual for our discount coupons.
(Images by: stainlesssteeldroppings.com & frankston.voc.gov.au)

3. Thirdly our design for the POS Display units.
(Images by: stainlesssteeldroppings.com, allaboutmexico.com & frankston.voc.gov.au)

We have intentionally made each design similar so that they are recognizable when seen separately. For example, someone may see a billboard or banner, and then recognize it again at a display unit in a retail outlet. This will help in building the Brand as a recognizable brand product.



Costs & Pricing

 

In order to decide exactly what our pricing strategy would be; we first had to analyze the costs involved in producing, packaging, exporting and distributing our QueRico! sauce to Australia.



Here are the approximate costs for such exportation:

Landing costs for port of destination.
Firstly, the factory cost of our sauce per pound including our packaging will be $2.50.
In addition, there will be a local freight fee to carry the sauce to the port of shipment. This cost will come to $0.25 per pound.

We then need to add the cost of export documentation that will come to $0.20 per pound.

Lastly, we have the ocean freight insurance which is calculated at $0.75 per pound of sauce.

It is calculated that the import duties applicable to our sauce product is 12%. This gives us a sub-total of $4.14.


Average wholesale and retail markups for channel members:
The average markup by wholesalers in Sydney and Melbourne is expected to be $1.25 and the retail markup is expected to be 50%. This gives a final consumer price of $8.09.

The typical trade promotions (e.g., discounts)

The typical discounts and promotions are 10% of the retail price. These promotions however take place for only an average of one month per year, and as such, the final price paid by the consumer should not always include this discount.



Average retail price to the consumer in the foreign market

So we come to the average retail price to the consumer in the Australian market before seasonal discount and it is equal to $8.09. The retail price to the Australian consumer after seasonal discount will be $7.28.


Calculations:

 

Export Sale

Factory price

$2.50

Domestic freight

$0.25

Subtotal

$2.75

Export documentation

$0.20

Subtotal

$2.95

Ocean freight and insurance

$0.75

Subtotal

$3.70

Import duty (12% of landed cost)

$0.44

subtotal

$4.14

Wholesaler /distributor markup

$1.25

Subtotal

$5.39

Retail markup (50 percent)

$5.39

Final Consumer price

$8.08

Seasonal Discount (10 percent)

$0.81

Final Consumer price after seasonal discount

$7.28

Our initial plan was to keep our pricing low so that everyone including and aside from our target market would give our sauce a try.

However, because of the costs involved in exportation from the U.S. to Australia, as well as keeping our quality by using the finest ingredients- we realize that our pricing will be somewhere centered; but in the higher scale of competitive sauces.

We feel this will not hinder our process, as again we don’t have much competition in the way of the “Authenticity” of real Mexican sauce in Australia. Further, the prices for foods overall is more expensive in Australia then as the U.S., and we feel our consumers will feel that the freshness, taste and fine quality of the sauce is worth the retail price to the consumer.

As an example of our philosophy, anyone here in the U.S. who buys Grey Poupon mustard knows full well they are going to pay a much higher price than a regular generic brand of mustard. However, because of the high quality and flavor, consumers buy it, and this brand of Kraft mustard is very successful indeed! We are expecting a similar outcome for QueRico! in Australia!

Conclusion
For our conclusion, we have outlined in short the factors, elements and the important decisions we have made moving forward based upon our findings.

Executive Summary: Here we outlined the contents of the report.
Introduction: We introduced our reasons for contemplating exporting abroad and our decision to conduct research.
Mission Statement: We have redefined GreatFoods, Inc.’s new mission statement moving forward.
Country Market Selection: We discuss here our decision for Australia to be our first host country in exporting QueRico!
Competitive Environment: We have listed a number of direct and indirect possible competitors in the spreads and sauces market of Australia.
Target Market: Our target market will first be the Mexican Australians residing in Melbourne and Sydney. We will then hope to also expose our product to the already highly populated cities they reside in.
Product Strategy: We intend to keep our product standardized and describe the geographic locations in Sydney and Melbourne with which the Mexican Australians frequent for shopping and dining.
Distribution Strategy: We will use direct distribution through the channel of retailers that are located in the above described areas. These retailers will include grocery stores, mom and pop restaurants, as well as department and discount stores.
Communication Strategy: Here we inform of the importance of branding as well as discuss the key to our Brand core strategy and value of proposition. We then have listed our three top communication vehicles to implement as well as laid out our preliminary visual campaigns for each vehicle.

Costs & Pricing: Lastly, we discuss our findings of the costs of exportation and come to a pricing strategy that we can afford, and that we feel will still seem reasonable to our target market of consumers.

In closing, we feel that we have done our homework, and look forward to our first venture out into the international market. We have high expectations of success in Australia, and then plan to branch out further into other host countries. The World is our limit!



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