Country Market AnalysisCountry Market Analysis~Uncrustables in Mexico~~Uncrustables in Mexico~

Samantha BaldridgeSamantha Baldridge Roland ChangRoland Chang Steve FlahertySteve Flaherty

Mike PumphreyMike Pumphrey Laura RolkaLaura Rolka

Core ProductCore Product

Q - Quality: tastes good Q - Quality: tastes good F - Features: Round, crust-less, filled with F - Features: Round, crust-less, filled with

jelly and peanut butter, or jelly and peanut butter, or cheese cheese

I - Image: “With a name like Smucker’s it I - Image: “With a name like Smucker’s it has to be good.” has to be good.”

S - Service: convenience and ease of S - Service: convenience and ease of preparation preparation

T – Technology: noneT – Technology: none

Smucker’s CompanySmucker’s Company

Seen as a very Seen as a very ethical, wholesome ethical, wholesome companycompany

Not likely to exploit Not likely to exploit people for the basis of people for the basis of profitabilityprofitability

Target Market of the USTarget Market of the US

DemographicsDemographicsPeople – employed mothers with young People – employed mothers with young

childrenchildrenAge – 30’s to early 40’sAge – 30’s to early 40’sClass – Upper-Middle ClassClass – Upper-Middle ClassMarital Status – Single or MarriedMarital Status – Single or Married

Target Market of the US (cont.)Target Market of the US (cont.)

GeographicGeographicLarge CitiesLarge CitiesSuburban AreasSuburban Areas

PsychographicsPsychographicsBusy and on the goBusy and on the go

Target Market of the US (cont.)Target Market of the US (cont.)

BehaviorBehaviorBought at local grocery storesBought at local grocery storesBought on a weekly basisBought on a weekly basisUsed in order to save timeUsed in order to save time

Benefits Sought Benefits Sought Quick preparationQuick preparationTime SavedTime SavedPre-madePre-madePortablePortable

Population of MexicoPopulation of Mexico

Total = 104.8 Million Total = 104.8 Million

Distribution of Males and Females by Age

0

1,000

2,000

3,000

4,000

5,000

6,000

Males Females

0-4 yrs

5-9 yrs

10-14 yrs

% of Males and Females

51%49% Males %Females %

Economic Status Economic Status

Gross National Product = $578 Billion Gross National Product = $578 Billion Personal Income per Capita = $8,900 Personal Income per Capita = $8,900 40% of the population is below the Poverty 40% of the population is below the Poverty

Level Level Consumer price inflation = 4%Consumer price inflation = 4%Average consumer price inflation = 5%Average consumer price inflation = 5%Steady, decreasing trend, but still within Steady, decreasing trend, but still within

authorities target rangeauthorities target range

Urban UnemploymentUrban Unemployment

3 Types of Unemployment3 Types of UnemploymentOpenOpen

3.3% (age 12 or over who don’t work, but are 3.3% (age 12 or over who don’t work, but are available to work)available to work)

UnderemploymentUnderemployment20.5% 20.5%

economically active population unemployedeconomically active population unemployed Includes those employed for less than 35 hrs/ weekIncludes those employed for less than 35 hrs/ week

Insufficient IncomeInsufficient Income10% (economically active, but earning less than 10% (economically active, but earning less than

minimum wage) minimum wage)

Surface TransportationSurface Transportation

BusesBusesMain source of transportationMain source of transportation3 classes of buses3 classes of buses

Luxury – bathrooms, assigned seats, A/C, infrequent stopsLuxury – bathrooms, assigned seats, A/C, infrequent stops 11stst Class – more frequent stops, A/C, assigned seats Class – more frequent stops, A/C, assigned seats 22ndnd Class – stops for anyone, anywhere, all the time, most Class – stops for anyone, anywhere, all the time, most

people stand while ridingpeople stand while riding

TrainsTrains Not efficient source of transportation, oldNot efficient source of transportation, old 2 classes2 classes

Surface Transportation (cont.)Surface Transportation (cont.)

Taxis Taxis PlentifulPlentifulReasonably PricedReasonably PricedBetter alternative due to high gas pricesBetter alternative due to high gas prices

AutomobilesAutomobilesSlow drivers/ Fast driversSlow drivers/ Fast driversPotholes, roads not maintainedPotholes, roads not maintainedFor people who would like to exploreFor people who would like to exploreSlow mode of transportationSlow mode of transportation

Cultural EnvironmentCultural Environment LanguageLanguage

Anywhere from 40-60 languages.Anywhere from 40-60 languages. Dialects spokenDialects spoken

Living conditionsLiving conditions DietDiet

Most important meal is served between 3 and 4. Most important meal is served between 3 and 4. Everything is prepared fresh.Everything is prepared fresh. Corn is their main staple food.Corn is their main staple food. The frozen food market is expanding, especially in urban The frozen food market is expanding, especially in urban

areas.areas. They consume fast food, including McDonald’s, Taco Bell, They consume fast food, including McDonald’s, Taco Bell,

and Pizza Hut.and Pizza Hut.

Cultural Environment (cont.)Cultural Environment (cont.) LifestyleLifestyle

Typically, people (children and adults) go home for lunch Typically, people (children and adults) go home for lunch everyday.everyday.

HousingHousing Small living spacesSmall living spaces Small percentage of the population owns refrigerators (16.7%)Small percentage of the population owns refrigerators (16.7%)

RetailersRetailers Convenience stores have installed in-store freezing units to Convenience stores have installed in-store freezing units to

satisfy customers growing preference for ready-to-eat snacks and satisfy customers growing preference for ready-to-eat snacks and mealsmeals

Social ClassSocial Class The Mexican frozen food market is mainly composed of the upper The Mexican frozen food market is mainly composed of the upper

and middle classes which represents approx. 25% of Mexico’s and middle classes which represents approx. 25% of Mexico’s total population, or 25 million people.total population, or 25 million people.

Buyer BehaviorBuyer Behavior

During the 80’s it was perceived that frozen During the 80’s it was perceived that frozen foods were old and tasteless. Due to increased foods were old and tasteless. Due to increased frozen food technologies perception has started frozen food technologies perception has started to change.to change.

Household consumption of frozen foods in Household consumption of frozen foods in Mexico is increasing due to growth in purchasing Mexico is increasing due to growth in purchasing power, ownership of refrigerators and microwave power, ownership of refrigerators and microwave ovens; and less meal preparation time due to ovens; and less meal preparation time due to busier work schedules.busier work schedules.

Traditionally, a two-hour lunch break at home is Traditionally, a two-hour lunch break at home is taken before returning to work or school.taken before returning to work or school.

Membership of Trade GroupsMembership of Trade Groups

North America Free-Trade Agreement North America Free-Trade Agreement (NAFTA)(NAFTA)

It allows free trade between the US and It allows free trade between the US and Mexico.Mexico.

Frozen Food Market in MexicoFrozen Food Market in Mexico

The overall frozen food market in Mexico The overall frozen food market in Mexico is estimated at over $900 million dollars is estimated at over $900 million dollars annually and is expected to grow at an annually and is expected to grow at an average of 13% over the next few years. average of 13% over the next few years.

Consumption of frozen foods is Consumption of frozen foods is concentrated in major cities such as concentrated in major cities such as Mexico City, Guadalajara, and Monterrey.Mexico City, Guadalajara, and Monterrey.

Smucker’s Presence in MexicoSmucker’s Presence in Mexico

No great presence of Smucker’s products No great presence of Smucker’s products exist currentlyexist currently

But an overall jam and jelly market does But an overall jam and jelly market does existexist

Despite Smucker’s small presence in the Despite Smucker’s small presence in the Mexican market, they have reported an Mexican market, they have reported an overall increased sales of 25%.overall increased sales of 25%.

Competition in MexicoCompetition in Mexico

No current products are similar to No current products are similar to UncrustablesUncrustables

Potential CompetitorsPotential CompetitorsGrupo BimboGrupo BimboNestleNestleSigma AlimentosSigma AlimentosCorporativo UnileverCorporativo Unilever

Positioning of CompetitorsPositioning of Competitors

All have good position in market and record over All have good position in market and record over $100 million dollars in sales annually$100 million dollars in sales annually

All have been in Mexico for an extended period All have been in Mexico for an extended period of time, giving them strong brand equityof time, giving them strong brand equity

Both Grupo Bimbo and Sigma Alimentos have Both Grupo Bimbo and Sigma Alimentos have been rated in the top 20 of Mexican companiesbeen rated in the top 20 of Mexican companies

Unilever is the second largest producer of Unilever is the second largest producer of consumer products, worldwideconsumer products, worldwide

Positioning of Smucker’s In USPositioning of Smucker’s In US

Usage occasionsUsage occasions School lunchesSchool lunches On the go mealsOn the go meals

BenefitsBenefits A fun and easy snackA fun and easy snack Saving mother’s timeSaving mother’s time

UsersUsers Young kidsYoung kids MothersMothers People on the goPeople on the go Lazy peopleLazy people

AttributesAttributes Portable Portable CompactCompact Pre-madePre-made Consistent tasteConsistent taste

Positioning in MexicoPositioning in Mexico

PricePriceMexico is a price driven market. Therefore Mexico is a price driven market. Therefore

low-priced foods, produced domestically, are low-priced foods, produced domestically, are the largest selling frozen foods purchased in the largest selling frozen foods purchased in MexicoMexico

PromotionPromotionMedia availableMedia available

TV, Radio, Cinema, Internet, Magazines, TV, Radio, Cinema, Internet, Magazines, Newspapers, Outdoor sites (billboards)Newspapers, Outdoor sites (billboards)

Positioning in Mexico (cont.)Positioning in Mexico (cont.)

Promotion (cont.)Promotion (cont.)Penetration (Percentage of Households)Penetration (Percentage of Households)

Television – 88% Television – 88% Radio – 99% Radio – 99% Cinema – 56%Cinema – 56%Internet – 10%Internet – 10%Magazines – 29%Magazines – 29%Newspapers – 46%Newspapers – 46%Outdoor Sites – Difficult to measureOutdoor Sites – Difficult to measure

Distribution by GeographyDistribution by Geography

65% live in urban areas, with around 18 65% live in urban areas, with around 18 Million in the Metropolitan area of Mexico Million in the Metropolitan area of Mexico CityCity

About 24% of the population still lives in About 24% of the population still lives in small rural communitiessmall rural communities

12.7 Million people are indigenous12.7 Million people are indigenous

Distribution and LogisticsDistribution and Logistics

Smucker’s currently uses trucks to Smucker’s currently uses trucks to distribute products in Mexicodistribute products in Mexico

Trucking in Mexico is relatively cheap, Trucking in Mexico is relatively cheap, however looting is prevalenthowever looting is prevalent

New distribution center opening soon in New distribution center opening soon in Southern United States solely for Southern United States solely for UncrustablesUncrustables

Distribution costs in Mexico represent up Distribution costs in Mexico represent up to 25% of the retail price of frozen foodsto 25% of the retail price of frozen foods

Brand Labeling and PackagingBrand Labeling and Packaging

This is the current packaging in the USThis is the current packaging in the US

What needs to change for introduction in What needs to change for introduction in Mexico?Mexico?Language onlyLanguage only

Promotions in the USPromotions in the US

Sales promotionsSales promotions Smucker’s doesn’t give price discountsSmucker’s doesn’t give price discounts It’s against policy to give away samples, however, this It’s against policy to give away samples, however, this

was contradicted with the introduction of was contradicted with the introduction of Uncrustables.Uncrustables.

Public relationsPublic relations Kidd SandwichKidd Sandwich drove around the US in an drove around the US in an

Uncrustables vanUncrustables van

Event sponsorshipEvent sponsorship ““Stars of Ice”Stars of Ice”

RegulationsRegulations

Imports and TradesImports and Trades The key document here is the certificate of origin. It The key document here is the certificate of origin. It

proves the product came from the US, therefore, it proves the product came from the US, therefore, it gains NAFTA preferential treatment.gains NAFTA preferential treatment.

There is a 15% value added tax for any good entering There is a 15% value added tax for any good entering the Mexican border.the Mexican border.

PromotionsPromotions Marketing samples under $300 require no paperwork Marketing samples under $300 require no paperwork

and are duty-free. Those above $300 require a and are duty-free. Those above $300 require a Mexican temporary import permit and a bond.Mexican temporary import permit and a bond.

Regulations (continued)Regulations (continued)

PackagingPackagingMust be in Spanish and include the name of Must be in Spanish and include the name of

the business and the address of the importerthe business and the address of the importerMust include net contents, directions, Must include net contents, directions,

warningswarningsProduct StandardsProduct Standards

There is a Mexican equivalent to the United There is a Mexican equivalent to the United States FDA, which products must conform to.States FDA, which products must conform to.

Regulations (continued)Regulations (continued)

LaborLaborThere is a minimum daily wage ($4.50) There is a minimum daily wage ($4.50)

OwnershipOwnershipMexican law now allows 100% foreign Mexican law now allows 100% foreign

ownership of Mexican corporations.ownership of Mexican corporations.A foreign stock holder must have a Mexican A foreign stock holder must have a Mexican

tax identification number.tax identification number.

SWOT AnalysisSWOT Analysis(Strengths)(Strengths)

Smucker’s has a presence in MexicoSmucker’s has a presence in MexicoUnique productUnique productParticipation in NAFTAParticipation in NAFTADistribution is easier because of location Distribution is easier because of location

relative to USrelative to USMexican’s acceptance of the American Mexican’s acceptance of the American

lifestyle and products.lifestyle and products.Little product modification neededLittle product modification needed

SWOT AnalysisSWOT Analysis(Weaknesses)(Weaknesses)

Quantity of product per package may be a Quantity of product per package may be a hindrance due to lack of refrigeratorshindrance due to lack of refrigerators

No real brand equity, especially compared No real brand equity, especially compared to their main competitorsto their main competitors

Product unfamiliarityProduct unfamiliarityPricePrice

SWOT AnalysisSWOT Analysis(Opportunities)(Opportunities)

Infiltrating convenience storesInfiltrating convenience storesThe culture is more on the go.The culture is more on the go.The consumer frozen food market is The consumer frozen food market is

growing quickly, especially in urban areasgrowing quickly, especially in urban areasTelevision and radio penetrates the Television and radio penetrates the

majority of the market, making for easy majority of the market, making for easy advertisingadvertising

SWOT AnalysisSWOT Analysis(Threats)(Threats)

Competitor dominance in the frozen food Competitor dominance in the frozen food marketmarket

Small target marketSmall target marketLack of refrigeratorsLack of refrigeratorsBuses as main means of travel may affect Buses as main means of travel may affect

purchase decisionspurchase decisionsTraditionally, Mexican’s have a two hour Traditionally, Mexican’s have a two hour

lunch break and prepare fresh foodlunch break and prepare fresh food