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International Marketing Strategy


International Marketing Strategy Rachel Bauer, Pat Lynch, Sarah vonFischer, Erik Wright Smucker s Uncrustables in Germany Uncrustables in Germany? – PowerPoint PPT presentation

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Title: International Marketing Strategy

International Marketing Strategy
Rachel Bauer, Pat Lynch, Sarah vonFischer, Erik
  • Smuckers Uncrustables in Germany

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

Assessment of Potential MarketEating Habits of
  • Lunch is the primary meal of the day in Germany.
    It is typically a warm meal served around noon.
  • Recently consumers have begun to shift away from
    large main meals towards snacks and smaller
    dishes this could lead to increased interest in
    a product like Uncrustables.
  • Large family meals are still common at noontime
    on Saturdays and Sundays

Assessment of Potential MarketFrozen Food Market
in Germany
  • In 2003 the German Frozen food market reached a
    value of 6.84 billion
  • This was an increase of 13.8 since 1999
  • The frozen food market includes frozen ready
    meals, frozen deserts, frozen bakery products,
    frozen fruit and vegetables, and frozen meats.

Assessment of Potential MarketFrozen Food Market
in Germany
  • Frozen ready meals was the leading segment of the
    market that contributed 3.3 billion of the total
    revenue, 48.6 of the of the markets value.
  • The German frozen food market is the largest in
    the European Union and Eastern Europe.
  • Even though the market is mature, analysts expect
    the growth rate to be moderate and confirm
    Germanys position as the largest in Europe.
  • This is good news for Uncrustables in Germany.

Assessment of Potential MarketFrozen Food Market
in Germany
Year million million Growth 1999
6,008.2 5,319.7 2000 6,240.0 5,524.9
3.90 2001 6,495.5 5,751.1 4.10 2002
6,714.8 5,945.2 3.40 2003 6,837.2
6,053.7 1.80 Source Datamonitor D A T A M
This data shows the recent growth in the German
frozen food market and the increasing
net value of the market
Assessment of Potential MarketFrozen Food Market
in Germany
Geography Share Rest of Europe
54.80 Germany 16.10 UK 15.00 France
14.10 Total 100.0 Source Datamonitor D
Compared to other European countries, Germanys
frozen food market holds a slight advantage in
market share
Assessment of Potential MarketFuture Market
  • 2005 is predicted to have the highest future
  • By 2008 analysts expect the frozen food market to
    reach a value of 7.9 billion, which is a
    stronger growth prediction than for the UK and
    Italian markets, and significantly higher than
    the growth of the French market.
  • If Smuckers was to enter this market it would be
    most beneficial to do it quickly.

Assessment of Potential MarketReady Meal Market
  • The German ready meal market has reached a net
    worth of 2.6 billion
  • The market had a growth rate of 6.7 between
  • Germany is currently third in ready meal market
    size behind France and the United Kingdom

Assessment of Potential MarketReady Meal Market
  • The leading segment of the ready meal market is
    the frozen ready meal segment accounting for
    81.7 of the market value.
  • The expected growth rates for this market is
    expected to experience decline slightly
  • By 2008 the ready meal market is predicted to
    reach a net value of 3.3 billion, which
    indicates growth of 5.1 in the 2003-2008 periods

Assessment of Potential MarketGermanys Economic
  • The GNP is around 1.864 billion. More
    relevantly, they have a per capita GNP of
    22,740, making them one of the most affluent
    nations in Europe.
  • GNP is 22,740 per capita, and the GDP is 27,600
    per capita, once again proving that the average
    population should be able to afford our product.
  • Germanys western part of the country is more
    affluent than the former communist, eastern area.

Assessment of Potential MarketGermanys Economic
  • The total population of Germany is 82 million
    (more specifically, 82,531,700 at the end of
  • Population growth has been slow since the 1960s,
    so no future change is expected
  • There is sufficient income and population in
    Germany for Smuckers to invest their product in

Assessment of Potential MarketCompetition
  • Company market share
  • Private label  21.2
  • Langnese-Iglo GmbH   13.8
  • Aldi GmbH Co KG   12.5
  • Conditorei Coppenrath Wiese GmbH Co KG  
  • Dr August Oetker Nahrungsmittel KG   7.4
  • Wagner Tiefkühlprodukte GmbH   6.1

Companies well established in the German frozen
food industry are listed above. These are the
main competitors for Smuckers upon entering
Assessment of Potential MarketCompetition
  • Langnese-Iglo has products such as frozen pizzas,
    hamburgers, chicken sandwiches, fish sticks,
    pasta, and baguettes.
  • Coppenrath Wiese specializes mostly in
    breakfast rolls and desserts
  • Dr Oetker is mostly in the business of frozen
  • Wagner Tiefkühlprodukte GmbH offers a variety of
    pizzas, bruchettas and wraps

Assessment of Potential MarketCompetition
  • Findus has come out with a product called Crispy
  • Flavors include
  • 3 cheese
  • Beef
  • Sweet corn, bacon, and chicken

Assessment of potential market
Direct Competition
  • Dr. Oetker has come out with frozen sandwiches
  • They microwave in 2 minutes
  • Flavors include
  • Chicken BBQ
  • Hot Peppers
  • Pizza Style
  • Tomato Feta
  • Hawaii

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

  • The distribution of Uncrustables in Germany
    depends on many different variables including the
  • Surface Transportation
  • Geography (large cities and surrounding
  • Current sales and production facilities in
  • Current suppliers and distributors in Germany
  • German legislation pertaining to foreign direct
    investments, tariffs, and taxes

Distribution Surface Transportation
  • The western states of Germany have a more
    advanced transportation infrastructure, but
    government spending is closing the gap.
  • Ease of travel in different parts of the country
    is something to consider when deciding on the
    placement of different facilities in Germany.
  • In 2005, a new system is supposed to be
    implemented to charge lorries (trucks) 12.4 euro
    cents per kilometer.
  • This makes truck travel a more expensive option.

Distribution Surface Transportation
  • The railway system for passenger travel has
    recently become more expensive and has lost a lot
    of customers due to an economic downturn in 2003.
  • Railways are still commonly used for freight
    services, with annual goods totaling 285 tons.
  • A problem with this source of transportation
    could be problems with monopolistic pricing for
    the DB (the federally sponsored company).

Distribution Surface Transportation
  • The use of sea-going merchant vessels for
    transportation of goods is on the downturn,
    totaling 246 tons in 2003 (less than the
    railways 285 tons).
  • The most important port for Germany is Rotterdam
    in the Netherlands, and the most used domestic
    port is in Hamburg (accounting for 35 of all
    freight shipped to German ports).

Distribution Surface Transportation
  • Other main ports in Germany are Wilhelmshave,
    Bremerhave, Bremen, Rostock, and Lubeck.
  • If transportation using sea-going merchant
    vessels was chosen to be used by Smuckers for
    Uncrustables, it would be important to consider
    the implications of locating Uncrustables
    facilities by one of these major cities.

Distribution Surface Transportation
  • The most used airport for freight and passenger
    travel is Rhein-Main Airport near Frankfort.
  • Cologne-Bonn is the second most used for freight
  • Again, if using airport for freight
    transportation, it would be important to consider
    a distribution facility near one of these two

Distribution Surface Transportation
  • Roads 226,000 km in 1992 (11,000 km of these
    roads are at least four lanes)
  • Railroads 40,000 km in 1994 (16,000 km of which
    are electrified)
  • Airports 660 total (12 civilian airports provide
    passenger and cargo service within the country
    and to the rest of the world)

Distribution Surface Transportation
  • Ports several dozen large, well-equipped ocean
    and inland ports
  • Inland Waterways 6,900 km of navigable inland
    waterways, including extensive canal systems
    (inland waterways account for about 20 of
    freight shipping)

Distribution Geography
  • Germany shares boundaries with nine other
  • Denmark
  • Poland
  • The Czech Republic
  • Austria
  • Switzerland
  • France
  • Luxembourg
  • Belgium
  • The Netherlands
  • This is important to consider when choosing where
    to put production and distribution facilities.
    Putting a facility in a neighboring country could
    be the most cost-efficient.

Distribution Geography
  • The three largest cities are Berlin (3.4
    million), Hamburg (1.7 million), and Munich (1.2
  • Concentration of population
  • The most densely populated cities are Berlin
    (3,898 persons per sq. km), Hamburg (2,236
    persons per sq. km), and Bremen (1,697 persons
    per sq. km).
  • 1/5 of the nations total population is in North
    Rhine-Westphalia (the state whos cities include
    Berlin, Bremen, and Hamburg.

Distribution Current Sales in Germany
  • There are currently no sales offices or
    production facilities in Germany.
  • Also, there are no Smuckers products on store
    shelves in Germany.
  • Smuckers products can be bought from online

Distribution Current Distributors and Suppliers
in Germany
  • Smuckers does not own its suppliers or
    distributors. It does not grow its own fruit,
    nor does it manufacture its own labels or storage
  • When going into Germany, one would need to decide
    what suppliers and distributors are available and
    the best to use.

Distribution Production in Germany
  • Smuckers Uncrustables are currently produced in
    a manufacturing facility in Scottsville, KY.
  • It would be important to decide whether to
    produce Uncrustables in Germany or to import them
    from Kentucky.

Distribution Production in Germany
  • Many factors were at play in Smuckers decision
    to close some plants. A strike affected the
    Woodburn facility last year, though local sources
    say the workforce included many second-generation
    employees who were willing to work with the
    company to improve efficiencies.
  • When considering where to have a production
    facility in Germany, it will be important to look
    at factors such as the workers demographics and
    attitudes in addition to factors such as cost.

Distribution Foreign Direct Investments
  • Germans and Americans regularly make investments
    in each others countries.
  • Germany is the United States largest European
    trading partner and fifth largest partner in the
  • France, the Netherlands, and the United States
    led the list of Germanys foreign investors
    during 2003.

Distribution Foreign Direct Investments
  • The profit rate of US direct investment in
    Germany was 5.1 in 2003, compared with 3.7 a
    year earlier.
  • This is showing that US investments in Germany
    are becoming more and more profitable.

Distribution Foreign Direct Investments
  • German government officials, and the population
    in general welcome foreign investment that
    provide new jobs. There are no serious
    limitations on new projects.
  • Foreign investors encounter the same conditions
    as their German counterparts in obtaining
    licenses, securing building permits, and gaining
    approval for investment incentives.
  • However, the German government often opposes
    hostile takeovers.
  • The next slide shows an example

Distribution Squeeze-out example
  • A provision of the take-over law concerning
    squeeze-outs has been used frequently. According
    to the law, an investor who holds at least 95 of
    equity can force the remaining shareholders to
    sell their shares in the company.
  • Since the first quarter of 2003, however, when
    Procter Gamble of the US unsuccessfully tried
    to use the squeeze-out provision to take over all
    of Walla, a German hair-care company, investors
    have rarely been able to reach the necessary 95
  • Minority shareholders will deliberately increase
    their stakes to force the investor to make a
    higher offer.

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

Segmentation and Targeting
  • Demographics targeted towards moms across the
    United Statesmost likely people of middle- or
    upper-range incomes (because it is definitely
    cheaper for a mom to make her own peanut-butter
    and jelly sandwiches). This is also mostly
    targeted toward working mothers.
  • Geographic not necessarily specific
    geographically, although the main focus now is in
    the United Statesnot the international market.
  • Smuckers may consider entering Uncrustables in
    the wealthier, western half of the country for
    easier penetration of the market

Segmentation and Targeting
  • The Average Family
  • Our research shows that the average family
    doesnt know what theyre going to have for
    dinner until 4 p.m., and probably the most
    popular category of food is handheld products you
    can take in the car, Smuckers says.

Segmentation and Targeting
  • Children and Schools (although children are not
    directly targeted)
  • We continue to focus on Uncrustables, our line
    of crustless, thaw-and-serve peanut butter and
    jelly sandwiches. Within the school foodservice
    market, sales of Uncrustables have increased
    substantially over last year, yet to date we are
    in fewer than 20 percent of school districts
  • Reaching a later percentage of children with a
    branded food item, served as a meal or nutritious
    snack, is a most exciting prospect for our

Segmentation and Targeting
  • Amusement Parks and Ball Parks
  • The Uncrustables line was also successful this
    year in traditional foodservice outlets,
    especially in the recreation category where
    initial placements have included Walt Disney
    World and several major league baseball parks.

Segmentation and Targeting
  • In the United States retail market the Companys
    products are sold through brokers to food
  • food wholesalers
  • club stores
  • mass merchandisers
  • military commissaries.

Segmentation and Targeting
  • Psychographics for people with interests that
    keep them on the go
  • Behavior this product is most likely for the
    loyal buyer. Smuckers is hoping to convince
    mothers that this product is convenient enough to
    keep handy around the house.
  • Also, Smuckers is most likely hoping that once a
    mother buys the Uncrustables the first time, the
    kids will be hooked and create a demand for the
    mother to continue buying the product.
  • Benefits convenience

Segmentation and Targeting
Age Distribution in Germany
Age Male Female Male () Female ()
0-4 1,924 1,825 51.3 48.7
5-9 2,061 1,953 51.3 48.7
10-14 2,328 2,210 51.3 48.7
15-19 2,403 2,277 51.3 48.7
20-24 2,418 2,298 51.3 48.7
25-29 2,353 2,227 51.4 48.6
30-34 3,023 2,851 51.5 48.5
35-39 3,743 3,504 51.6 48.4
40-44 3,542 3,360 51.3 48.7
Segmentation and Targeting
  • The previous graph displays the Target Market for
    Uncrustables, which consists of 14,697 million
    males and 13,878 million females, which includes
    parents and children
  • If Smuckers can tap into this vast population in
    their target market, Uncrustables could be very

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

Marketing Mix Product
  • Uncrustables are a sandwich made up of white
    bread, and with no crust
  • It come in three flavors, Grape, Strawberry and
    Grilled Cheese
  • The idea of new flavors and even seasonal ones is
    something that has been successful in the German
  • Germans do eat peanut butter but not necessarily
    peanut butter and jelly sandwiches. This may be
    something to consider pertaining to flavor.

Marketing Mix Product
  • Most get their food from both supermarkets and
    specialty shops (like bakeries, butcher shops,
  • Germans tend to shop more frequently than
    Americans, usually 2-4 times per week
  • The typical German household has a significantly
    smaller refrigerators than Americans and have a
    separate larger freezer in the basement
  • This all indicates that Germans may not be as
    interested in the larger packages of Uncrustables
    (such as the 10 and 18 pack). A pack of 4 may be
    more appealing to Germans.

Marketing Mix Packaging
  • Uncrustables are packaged in a cardboard box with
    each sandwich individually wrapped.
  • The individually wrapped sandwiches would also be
    easy to store in the freezer outside of the box.
  • The design has a picnic feel to it and the colors
    of the box vary with the different flavors.
  • The package looks All-American which is not
    necessarily a good thing.

Marketing Mix Packaging
  • The packages are produced in English and
    Smuckers name is prominently displayed on the
    front of the box along with the Uncrustables
  • The nutritional facts and ingredients are listed
    on the sides of the box, and an explanation of
    what Uncrustables are (including pictures) is on
    the back.

Marketing Mix Packaging
  • The Germans have recently installed new laws
    regarding waste disposal. In responses, companies
    are making more environment friendly packaging.
  • Green dots are starting to appear on packages
    that are recyclable, and while it is not
    required, it makes packages more acceptable.

Marketing Mix Place
  • The Industrial Investment Council offers
    consulting free of charge for investors in
    eastern Germany. This includes
  • Market research
  • Identification of partners
  • Permit applications
  • Advice on financial incentives
  • The investment allowance law provides for
    additional incentives for the acquisition of
    buildings, plants, and equipment in eastern
  • Regular incentives are 12.5 of investment cost
    for small and medium-sized companies, the rate is
    25, and it is increased by 2.5 in regions close
    to the Polish and Czech borders.

Marketing Mix Place
  • One thing to remember when analyzing the best
    location for a production facility is not
    necessarily the place that costs the least.
  • Smuckers realized this when they decided to
    close optimize their supply chain and consolidate
    manufacturing facilities. Smuckers closed
    plants in Watsonville, California, Woodburn,
    Oregon, and West Fargo, North Dakota allowing for
    more efficient product production and

Marketing Mix Promotion/Message
  • Our first priority was to serve our loyal
    existing customers. Weve continued to pursue new
    customers, but (were) really targeting the fall,
    back to school time period for implementing that
    new business.

Marketing Mix Promotion/Message
  • Uncrustables are a great time saving product for
    those parents on the go. With more and more two
    parent working families, the idea of a easy to
    serve, ready to go product is always a good one.
  • The idea of a convenient, low cost and also good
    tasting product can be seen with Uncrustables
  • Lastly, the flavors of the product are what some
    would call trademark American products a good
    old fashion PBJ and the Grilled Cheese.
    Something that children will associate with

Marketing Mix Promotion/Message
  • With capacity shortcomings, Smuckers pulled most
    of its advertising and promotion for the
    Uncrustables line.
  • Richard Smucker, co-CEO and CFO had this to say,
  • As a result, growth and sales projections
  • for the brand have been difficult to ascertain.
  • have pulled quite a bit of support for the brand,
  • but once we get back up to full support, then
  • have a better feel for growth

Marketing Mix Promotion/Media
  • In Germany print media holds a 48 share of
    advertising and is the leading medium for
  • Television is the most popular medium of
    communication and entertainment. Today some 30
    stations compete fiercely for audience ratings.
  • Each of the 16 Landers (states) are solely
    responsible for their television broadcast

Marketing Mix Promotion/Message
  • Uncrustables received free advertising when Liz
    Crenshaw of NBC4 did a segment on the product.
  • Currently, Uncrustable ads can be seen regularly
    on television and coupons are available in local
  • However, the most buzz about Uncrustables can be
    found on the internet.
  • Individual store promotion samples and displays

Marketing Mix Promotion/Media
  • The Uncrustables brand name has not been the
    sponsor of any major event, but Smuckers on the
    other hand has been the main contributor to an
    ice-skating event and a special episode of Family
    Feud has featured some the Smuckers Ice-Skating
  • In Germany over 27 million people belong to
    sports club and the most popular sport in Germany
    is Fussball (Soccer). Event and team sponsorship
    is a major player in advertising in Germany as
    well as player endorsement.

Marketing Mix Price
  • As we said before, pricing would not be a major
    issue in Germany because the per capita GNP is
    relatively high (22,740).
  • The price would depend on the extra expense of
    either importing the goods from the United States
    or producing them in Germany.
  • There are high tariffs on goods imported to the
    EU from the United States, particularly on
    processed foods containing added sugar, flour,
    starch, and milk.

Marketing Mix Price/Tax
  • The effective rate for trade tax varies by
    location from just under 12-20. It is around
    18 for most larger cities.
  • This tax is deductible as an expense for
    corporation tax.
  • German business profits are subject to 2 taxes
    corporation tax which is levied at 25 and
    subject to a surcharge of 5.5. The surcharge
    does not apply to companies with headquarter and
    management outside of Germany.
  • A foreign companys German branch would be
    charged both corporation tax and trade tax.

Marketing Mix Price/Tax
  • There is a 7 sales tax on food. This is charged
    to the manufacturer, not the consumer.
  • All these factors could ad to the price of
    selling Uncrustables in Germany.

Marketing MixPositioning Against Competition
  • Intermezzo are sold at a cost of .99 euro. With
    the current exchange rate of 1/1.32 Euro, the
    cost of one Intermezzo is about 1.31 (this
    includes tax).
  • In the U.S. Uncrustables cost about .75 per
    sandwich and usually come in packages of 4, 10,
    or 18.

Marketing Mix Positioning Against Competition
  • Uncrustables needs to consider the price of their
    competitors to decide if they want to position
    themselves based on price.
  • A leader in the German frozen food industry,
    Frosta, decided to position themselves on quality
    rather than low cost.
  • They suffered a large drop in sales.

Marketing Mix Positioning Against Competition
Crispy Pancakes
  • Crispy pancakes were developed for kids by
  • Unlike Crispy pancakes, Smuckers does not
    directly target children in Uncrustables
  • Crispy pancakes are served in many schools in
  • Smuckers has recently been promoting
    Uncrustables the same way by putting them within
    the school foodservice market.
  • Smuckers needs to consider this direct
    competition for the grilled cheese flavor in

Uncrustables in Germany? Main Factors to
  • Assessment of potential market
  • Distribution
  • Segmentation and Targeting
  • Marketing mix

  • Questions?
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