Country Market Analysis ~Uncrustables in Mexico~

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Country Market AnalysisUncrustables in Mexico

• Samantha Baldridge
• Roland Chang
• Steve Flaherty
• Mike Pumphrey
• Laura
  Rolka

2
Core Product

• Q - Quality tastes good
• F - Features Round, crust-less, filled with
  jelly and peanut butter, or
  cheese
• I - Image With a name like Smuckers it
  has to be good.
• S - Service convenience and ease of
  preparation
• T Technology none

3
Smuckers Company

• Seen as a very ethical, wholesome company
• Not likely to exploit people for the basis of
  profitability

4
Target Market of the US

• Demographics
• People employed mothers with young children
• Age 30s to early 40s
• Class Upper-Middle Class
• Marital Status Single or Married

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Target Market of the US (cont.)

• Geographic
• Large Cities
• Suburban Areas
• Psychographics
• Busy and on the go

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Target Market of the US (cont.)

• Behavior
• Bought at local grocery stores
• Bought on a weekly basis
• Used in order to save time
• Benefits Sought
• Quick preparation
• Time Saved
• Pre-made
• Portable

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Population of Mexico

• Total 104.8 Million

8
Economic Status

• Gross National Product 578 Billion
• Personal Income per Capita 8,900
• 40 of the population is below the Poverty Level
• Consumer price inflation 4
• Average consumer price inflation 5
• Steady, decreasing trend, but still within
  authorities target range

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Urban Unemployment

• 3 Types of Unemployment
• Open
• 3.3 (age 12 or over who dont work, but are
  available to work)
• Underemployment
• 20.5
• economically active population unemployed
• Includes those employed for less than 35 hrs/
  week
• Insufficient Income
• 10 (economically active, but earning less than
  minimum wage)

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Surface Transportation

• Buses
• Main source of transportation
• 3 classes of buses
• Luxury bathrooms, assigned seats, A/C,
  infrequent stops
• 1st Class more frequent stops, A/C, assigned
  seats
• 2nd Class stops for anyone, anywhere, all the
  time, most people stand while riding
• Trains
• Not efficient source of transportation, old
• 2 classes

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Surface Transportation (cont.)

• Taxis
• Plentiful
• Reasonably Priced
• Better alternative due to high gas prices
• Automobiles
• Slow drivers/ Fast drivers
• Potholes, roads not maintained
• For people who would like to explore
• Slow mode of transportation

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Cultural Environment

• Language
• Anywhere from 40-60 languages.
• Dialects spoken
• Living conditions
• Diet
• Most important meal is served between 3 and 4.
• Everything is prepared fresh.
• Corn is their main staple food.
• The frozen food market is expanding, especially
  in urban areas.
• They consume fast food, including McDonalds,
  Taco Bell, and Pizza Hut.

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Cultural Environment (cont.)

• Lifestyle
• Typically, people (children and adults) go home
  for lunch everyday.
• Housing
• Small living spaces
• Small percentage of the population owns
  refrigerators (16.7)
• Retailers
• Convenience stores have installed in-store
  freezing units to satisfy customers growing
  preference for ready-to-eat snacks and meals
• Social Class
• The Mexican frozen food market is mainly composed
  of the upper and middle classes which represents
  approx. 25 of Mexicos total population, or 25
  million people.

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Buyer Behavior

• During the 80s it was perceived that frozen
  foods were old and tasteless. Due to increased
  frozen food technologies perception has started
  to change.
• Household consumption of frozen foods in Mexico
  is increasing due to growth in purchasing power,
  ownership of refrigerators and microwave ovens
  and less meal preparation time due to busier work
  schedules.
• Traditionally, a two-hour lunch break at home is
  taken before returning to work or school.

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Membership of Trade Groups

• North America Free-Trade Agreement (NAFTA)
• It allows free trade between the US and Mexico.

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Frozen Food Market in Mexico

• The overall frozen food market in Mexico is
  estimated at over 900 million dollars annually
  and is expected to grow at an average of 13 over
  the next few years.
• Consumption of frozen foods is concentrated in
  major cities such as Mexico City, Guadalajara,
  and Monterrey.

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Smuckers Presence in Mexico

• No great presence of Smuckers products exist
  currently
• But an overall jam and jelly market does exist
• Despite Smuckers small presence in the Mexican
  market, they have reported an overall increased
  sales of 25.

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Competition in Mexico

• No current products are similar to Uncrustables
• Potential Competitors
• Grupo Bimbo
• Nestle
• Sigma Alimentos
• Corporativo Unilever

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Positioning of Competitors

• All have good position in market and record over
  100 million dollars in sales annually
• All have been in Mexico for an extended period of
  time, giving them strong brand equity
• Both Grupo Bimbo and Sigma Alimentos have been
  rated in the top 20 of Mexican companies
• Unilever is the second largest producer of
  consumer products, worldwide

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Positioning of Smuckers In US

• Usage occasions
• School lunches
• On the go meals
• Benefits
• A fun and easy snack
• Saving mothers time
• Users
• Young kids
• Mothers
• People on the go
• Lazy people

• Attributes
• Portable
• Compact
• Pre-made
• Consistent taste

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Positioning in Mexico

• Price
• Mexico is a price driven market. Therefore
  low-priced foods, produced domestically, are the
  largest selling frozen foods purchased in Mexico
• Promotion
• Media available
• TV, Radio, Cinema, Internet, Magazines,
  Newspapers, Outdoor sites (billboards)

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Positioning in Mexico (cont.)

• Promotion (cont.)
• Penetration (Percentage of Households)
• Television 88
• Radio 99
• Cinema 56
• Internet 10
• Magazines 29
• Newspapers 46
• Outdoor Sites Difficult to measure

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Distribution by Geography

• 65 live in urban areas, with around 18 Million
  in the Metropolitan area of Mexico City
• About 24 of the population still lives in small
  rural communities
• 12.7 Million people are indigenous

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Distribution and Logistics

• Smuckers currently uses trucks to distribute
  products in Mexico
• Trucking in Mexico is relatively cheap, however
  looting is prevalent
• New distribution center opening soon in Southern
  United States solely for Uncrustables
• Distribution costs in Mexico represent up to 25
  of the retail price of frozen foods

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Brand Labeling and Packaging

• This is the current packaging in the US
• What needs to change for introduction in Mexico?
• Language only

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Promotions in the US

• Sales promotions
• Smuckers doesnt give price discounts
• Its against policy to give away samples,
  however, this was contradicted with the
  introduction of Uncrustables.
• Public relations
• Kidd Sandwich drove around the US in an
  Uncrustables van
• Event sponsorship
• Stars of Ice

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Regulations

• Imports and Trades
• The key document here is the certificate of
  origin. It proves the product came from the US,
  therefore, it gains NAFTA preferential treatment.
• There is a 15 value added tax for any good
  entering the Mexican border.
• Promotions
• Marketing samples under 300 require no paperwork
  and are duty-free. Those above 300 require a
  Mexican temporary import permit and a bond.

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Regulations (continued)

• Packaging
• Must be in Spanish and include the name of the
  business and the address of the importer
• Must include net contents, directions, warnings
• Product Standards
• There is a Mexican equivalent to the United
  States FDA, which products must conform to.

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Regulations (continued)

• Labor
• There is a minimum daily wage (4.50)
• Ownership
• Mexican law now allows 100 foreign ownership of
  Mexican corporations.
• A foreign stock holder must have a Mexican tax
  identification number.

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SWOT Analysis(Strengths)

• Smuckers has a presence in Mexico
• Unique product
• Participation in NAFTA
• Distribution is easier because of location
  relative to US
• Mexicans acceptance of the American lifestyle
  and products.
• Little product modification needed

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SWOT Analysis(Weaknesses)

• Quantity of product per package may be a
  hindrance due to lack of refrigerators
• No real brand equity, especially compared to
  their main competitors
• Product unfamiliarity
• Price

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SWOT Analysis(Opportunities)

• Infiltrating convenience stores
• The culture is more on the go.
• The consumer frozen food market is growing
  quickly, especially in urban areas
• Television and radio penetrates the majority of
  the market, making for easy advertising

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SWOT Analysis(Threats)

• Competitor dominance in the frozen food market
• Small target market
• Lack of refrigerators
• Buses as main means of travel may affect purchase
  decisions
• Traditionally, Mexicans have a two hour lunch
  break and prepare fresh food