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Team “Hermosa” Sarah Baker, Mia Haddad, Tina Hidai, Nicole Takashima

Trader Joe’s Consideration of Corporate Expansion into Japan and Australia

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Executive Summary Trader Joe’s culture allows for it to be incorporated into international countries. With its

unique attributes ranging from a high level of customer service, a wide variety of international product offerings, an affordable price range, and its “Fearless Flyer”, Trader Joe’s can effectively promote its brand reputation. These qualities encourage expansion to potential markets in Australia and Japan due to market similarities and consumer attraction for food retail cultures like that of Trader Joe’s. Using Trader Joe’s SWOT analysis, we were able to compare and contrast with Japan and Australia’s key points to get a better understanding of their respective cultures. STP analysis was used to help create an effective marketing plan for both countries. Trader Joe’s needs to adapt to Australia’s laid back culture whereas Japan should expand further on their marketing and customer service efforts. Both Australia and Japan have high demands for high quality products with a nutritional image. Therefore, it would be beneficial to expand to these two specific countries. With globalization and technological advances on the rise, it is more imperative than ever to take advantage of the market growth opportunities. Objectives and Scope of Study

Our goal is to delve into the marketing structure and potential international growth opportunities of Trader Joe’s in two markets: Australia and Japan. With Japan, our target market scope consists of higher income segments of Generation M individuals and young adults. Positioning is suggested to be done through a niche strategy where Trader Joe’s unique health and organic smaller packaged food products appear to show highest potential profitability if taken to the Japanese consumer market. Some local tastes should also be considered through the production of new local products.

In terms of Australia, the scope of our target market would be middle to upper class individuals with high income and education levels. These individuals would have the luxury of spending their disposable income on groceries and exotic ingredients for cooking. Trader Joe’s would target the Australian market by offering foods similar to what is available in the United States due to their similar tastes in cuisine and preference for international flavors. They would also emphasize their healthy options such as fresh produce for the health conscious consumers.

Company Background

Founded in 1958 by Joe Coulombe, Trader Joe’s mission is to bring its consumers the best food and beverage values. The company has a wide variety of products ranging from over 800 unique grocery items categorized under its store label at an affordable price range. Their private label products are characterized by enhanced flavors, exotic recipes, high quality ingredients, special nutritional claims, and all­natural ingredients. The company operates a chain of diverse grocery stores ranging from discount warehouse clubs, natural foods stores, and specialty neighborhood grocery stores. Business has grown dramatically since its creation through innovation and sharp management techniques.

In order to increase its product value, Trader Joe’s buys directly from suppliers and bargains to pay the lowest price. Also, by purchasing products in bulk, prices can be lowered even more. Many grocers charge supplier fees for putting items on the shelf, which results in higher prices. However, Trader Joe’s does not add its supplier fees to final prices. All of these savings are passed onto the consumer (Biesada, "Trader Joe’s Company").

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Trader Joe’s has proven that cultural awareness can promote business growth. The company’s buyers travel around the world to find an eclectic selection of products to offer in stores to successfully target multicultural consumer segments. Trader Joe’s embodies the entrepreneurial spirit and displays innovative retailing, specializing in explaining its products to its customers with creative signage around the store. The company offers a “Fearless Flyer”, which shares recipes, product origin stories, and clever product explanations (“Trader Joe’s Company”). SWOT Analysis of Trader Joe’s

Trader Joe’s profits from selling gourmet, organic, and unusual imported foods. Current trends in the consumer food markets indicate that Trader Joe’s will continue realizing an increased number of consumers. As “food IQs” are generally increasing and the average person is becoming more health conscious, Trader Joe’s is likely to experience a larger consumer base and greater earnings (“Trader Joe’s Company”). Trader Joe’s also has resources invested into research and development and has extensively analyzed and surveyed consumer tastes to customize to varying ethnic groups. This is especially noteworthy when considering global expansion. (Llopis, “Why Trader Joe’s Stands Out”)

In addition to selling foods, the company also has recognized the profitability of cross­selling “non­food items including personal hygiene products, household cleaners, vitamins, pet food, plants, and flowers.”. Much of the company’s appeal comes from its brand image and positioning of being a health­oriented, local, and premium grocer. Trader Joe’s operates through a business model that recognizes cost saving strategies. Thus, the company is able to still charge competitive prices for gourmet foods and benefit from high profit margins. Trader Joe’s is also able to capitalize upon its brand loyalty because 80% of its in store products are branded under the private company name. Since Trader Joe’s has a more focused product line, it is able to purchase inventory from suppliers at larger bulk order discounts and significantly lower expenses. An additional cost saving strategy is realized through Trader Joe’s small store footprints. Because the average Trader Joe’s store takes up approximately 13,000 square feet, the company has attained the highest sales per square foot out of all North American grocers: in 2010, Trader Joe’s reported a sales per square foot of $1,750 (“Trader Joe’s Company”).

In terms of marketing, Trader Joes distributes a monthly newsletter, The Fearless Flyer, that enjoys a wide subscriber base and utilizes technology through a mobile app that advertises the latest promotions. The newsletter is highly entertaining and contains recipes, specials offerings, and source information (“Trader Joe’s Company”).

As for employee morale, Trader Joe’s strongly values motivation through generous compensation and benefits offered to its employees. The company’s compensation and benefits strategy includes health insurance for employees, regular promotional check­ups, and above­union pay. With such attractive rewards for employees, Trader Joe’s has an extremely low employee turnover rate and its strong commitment to customer service reinforces its friendly brand image (“Trader Joe’s Company”).

Trader Joe’s business structure is set up through a partnership with Aldi, a German­based international grocer. Because both companies market products in different product categories, they do not face issues of competing against each other. Benefits from this partnership include lowered market risk for Trader Joe’s and “horizontal integration and synergy between the jointly held companies” (“Trader Joe’s Company”).

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The entity possesses some weaknesses, however, in their inventory and distribution strategy, advertising plan, and brand integrity. In order to maintain low costs, Trader Joe’s must maintain tighter inventory management and stock a drastically lower range of variety products; while the typical grocery store chain stocks about 50,000 items in a given retail store, Trader Joe’s provides under 4,000 items (“Trader Joe’s Company”). This gives far less product options for consumers to select from and, consequently, may decrease the number of target consumers Trader Joe’s can satisfy. Trader Joe’s distribution strategy also limits its expansion abilities as company insiders have reported difficulties getting products to certain locations. The lean distribution strategy of the company involves manufacturers shipping purchases directly to Trader Joe’s distribution centers, sometimes with products already cut and wrapped. Although this strategy “minimizes the number of hands that touch a product” and lowers costs, new stores are limited by the location of Trader Joe’s distribution centers (Kowitt, “Inside Trader Joe’s”).

Another Trader Joe’s cost saving tactic is to limit its advertising (“Trader Joe’s Company”). A potential negative outcome of this strategy may be that Trader Joe’s is not reaching its full target market consistently. Trader Joe’s also does not have service departments to lower costs even further (Biesada, “Trader Joe’s Company”).

Although Trader Joe’s emphasizes its brand reputation as the local, neighborhood store, this image and its actual product sourcing is not consistent; Trader Joe’s is sourced by large multinational food companies (“Trader Joe’s Company”). If consumers begin to pay more attention to Trader Joe’s product sourcing, the company’s brand image and current positioning may be at stake.

One largely untapped marketing area and opportunity for Trader Joe’s lies in social media. The company is not hugely present on platforms like Twitter­­only fan­based pages currently exist. Thus, there is a lot of potential for Trader Joe’s to increase their consumer reach and clout through such social media sites. Through comparisons to Trader Joe’s competitors, it is also apparent that unlike its strong rivals, Trader Joe’s does not have any product delivery system in place. The company may benefit largely from implementing an online ordering system or store­to­home delivery service to enhance customer shopping experiences (“Trader Joe’s Company”).

Trader Joe’s could also improve marketing through “On the Radio” podcasts with in­store wifi availability for increased customer convenience/interaction. Such podcasts could be released on a regular basis (i.e. monthly or weekly). Related to the in­store wifi availability, Trader Joe’s can offer an app for consumers to use while shopping­­or virtually anywhere. While in the store, customers could use the app to find the location of different products or scan a product’s barcode to find related recipes. This will enhance the shopper experience, expedite processes for customers and store employees, and promote cross­selling. The app could also offer the same ordering or store­to­home delivery service options as previously suggested.

Other opportunities that Trader Joe’s could potentially leverage include additional services that may enhance the overall Trader Joe’s experience. In­store mini cooking sessions highlighting Trader Joe’s original recipes (i.e. “small plates”) are something the store could adopt: like Trader Joe’s already established sample service, customers may also enjoy trying samples of the dishes that were prepared specifically during such in­store cooking sessions.

To further highlight the Trader Joe’s image of being the local, neighborhood brand, the company could employ a local farmers market section in their stores. Items in this section could have promotional displays that identify the specific farm and city of production. Such a project

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would illustrate how the company is making an effort to reach out to its community via temporary, short­term local partnerships.

Although Trader Joe’s has seen a consistent streak of success, it faces the threats of competitors, slow growth, and supplier bargaining power. Trader Joe’s currently operates within fairly competitive grocery, wholesaler, and specialty food markets. Some of the many businesses that pose as competition for Trader Joe’s include Whole Foods, Safeway, Walmart, and Costco (“Trader Joe’s Company”). Trader Joe’s utilization of Aldi’s model of internally financed expansion to avoid high balance sheet cost creates another threat for the company as it causes it to expand at a slower rate. With timeliness being a key to success in current competitive retail industries, there is always the danger of other competitors preempting Trader Joe’s in prospective and existing markets. As much of Trader Joe’s products are sourced from powerful multinational food companies, supplier bargaining power may be very high and pose a threat to the company as well. Finding local partners to work with is also a common challenge that any foreign business will face when entering a new market­­this challenge is heightened when entering markets on the global scale. Analysis of International Market 1­ Japan

Currently, Trader Joe’s does not operate in Japan. However, based on secondary data research, Japan appears as a favorable market (Appendix:Table 1). From 2010­2012, the total food and beverage retail sales in Japan ranged from roughly $376.47 billion to $387.31 billion. During the same period, food retail sales of conventional supermarkets realized a growth from approximately $72,321.01 million to $75,086.82 million (Aoki, “Japan Retail Foods”). In 2013, the Japanese food retail industry generated $444.3 billion in sales. Independent specialist retailers, like Trader Joe’s, composed 30.2% of the total food retail industry (“Japan ­ Food Retail”). The Japanese food retail industry is forecasted to increase to $507.9 billion by 2018, and annual growth rate is estimated at 2.7% from 2013­2018. Based on such findings, the food retail industry in Japan offers market share potential for Trader Joe’s as the industry continues to thrive and grow.

Trader Joe’s currently possesses some strengths in regards to the Japanese market. For one, consumer trends indicate that organic and health products offered by Trader Joe’s parallels Japanese consumers’ health conscious attitudes. Japanese customers expect quality, safety, and environmental considerations in their products. They also respect the implicit values of organic foods: appreciation for ancient arts and craftsmanship. Additionally, Japan is readily available and willing to adapt foreign products into their diets because it is one of the world’s largest food importers. Trader Joe’s small store footprint also works well in Japan, since land is limited and expensive. Japan’s high context culture and emphasis on service quality is another area in which Trader Joe’s can leverage its pre­existing strengths (in customer service) (Cummings, “Japanese Consumers Hungry”).

The biggest weakness of the Japanese market is its difference in consumer taste preferences. Trader Joe’s would need to adapt some existing products and launch new lines to satisfy consumer palates. Such a costly modification of product taste would fail to achieve economies of scale since Trader Joe’s has no other international locations to integrate the products into. Additionally, customers prefer a wide selection of product categories to choose from. Yukihiro Moroe, a retail analyst of Goldman Sachs (Japan) Ltd., noted that, “Japanese consumers are spoiled by Japanese retailers and makers that supply numerous kinds of products

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in each category, from fish to pickles to deli” (Nakamura, “Foreign Retailers Relying”). Trader Joes would need to consider expanding product categories to refrain from disrespecting customer needs for product choices.

By capitalizing on the value of customer service and building networks, Trader Joe’s could realize many new potentially beneficial opportunities to take advantage of in Japan. For instance, the suggested in­store cooking sessions and local partnerships with farmers would support Japan’s high­context culture by building relationships and loyalty. Catalog ordering services are another opportunity for increased personal interactions with customers. To explore this unique purchasing option, Trader Joes could investigate and benchmark Anew, a Japanese local competitor, who currently offers catalog ordering.

Since the focal point of the high­context Asian culture is loyalty within relationships, foreign supermarkets and local supermarkets/farmers’ markets with pre­established networks pose as a potential threat; a big market in Japan already exists from local retail food sales­­70 % of “sales takes place in more than 1 million small food stores in Japan” (Cummings, “Japanese Consumers Hungry”). For example, a chain of food stores under the name of “Anew”, established about 500 stores in the country selling fresh and organic produce. They pose a potential leg up over Trader Joe’s as they already offer home delivery catalog ordering services. Other potential competitors include AEON, Jusco, and Ito Yokado (Nakamura, “Foreign Retailers Relying”).

To better market Trader Joe’s, it is necessary to identify relevant market segments, target consumers, and desirable corporate positioning. In terms of segmentation criteria, some prominent factors are: age, gender, consumer income level, and education level. Based on such segments identified through these given criteria/factors, attractive segments can be recognized and targeted. In respect to age, the young adults (20­30 year olds) and Generation M (65+ year olds) segments should be points of focus. Studies have revealed significant increases in elderly and younger populations. With the Generation M population alone, the segment made up 23% of Japan’s total population in 2010, and is expected to grow to 29% of the total population by 2020. By 2040, it is forecasted to make up 36% of the country’s total population (Aoki, “Japan Retail Foods”). Younger generation segments should also not be overlooked. Though Generation M holds the largest percentage of Japan’s total population, young adults form of a smaller, yet still valuable, segment to target. As for income and education level, Trader Joe’s should pursue consumers with higher levels of both factors. With higher education level, consumers tend to understand the value of health and health food products and would be willing to pay a premium price for organic or nutritional foods. Based on Japan’s culture, the female head of the household tends to take the responsibility of food shopping for the rest of the house; thus, Trader Joe’s should focus more on appealing to female consumers. Locations that consist of these market segments include Sendai, a residential area, and the urban city of Tokyo.

The positioning strategy of Trader Joe’s should be based on a niche strategy, where the company would capitalize on its unique products. The niche tactic is highly attractive as it would provide Trader Joe’s protection from competitive pricing pressures and large scale, mainstream marketing (“Japan ­ Food Retail”). Trader Joe’s should aim to create a brand image where consumers associate the company as a private premium brand. Not only should Trader Joe’s emphasize its high quality nutritional image, but it also should take advantage of its foreign image. Younger adults, especially, are likely to be attracted to the novelty and international aspect of the Trader Joe’s company.

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Before considering entry mode strategies, Trader Joe’s must understand its potential rivals in the Japanese market. Some of the top food corporations present in the Japanese market include Daiei Inc, AEON co Ltd, Lawson Inc., Seven & I holdings co Ltd, Ito­Yokado, Uny, Life Corp, and Izumi (“Japan ­ Food Retail”; Aoki, “Japan Retail Foods”). Many of the listed corporations are diversified, however a large proportion of their sales are realized through food retail. With Life Corp., for example, 80% of its total sales was made up of food sales in 2012. The strong presence of rivalry in Japan will be a large obstacle that Trader Joe’s will encounter (Appendix:Table 2) . Thus, Trader Joe’s must strategically plan a strong mode of entry and acknowledge all potential challenges when forming its marketing mix strategy.

In terms of its marketing mix strategy, Trader Joe’s must find the right balance between standardization and adaptation of its current US marketing strategy. With the existing Trader Joe’s products, the firm should highlight its convenience­based food products that are fresh and traditionally prepared. This is because Japanese culture highlights the element of convenience and preferences have been shifting away from frozen food consumption (“Japan ­ Food Retail”). Home Meal Replacements are one example of an attractive Trader Joe’s product. In Japan, popularity of HMRs is significant and is expected to make up 35% of future aggregate food purchases. This increased popularity is due to the fact that elderly populations experience increased difficulty in traveling to purchase food/meals and young professionals do not have the luxury of time to cook (Aoki, “Japan Retail Foods”). Trader Joe’s would also benefit the most from maintaining a fair mix of both domestic and international products, as consumer demand in Japan favors both product types due to an increased prominence of ethical niches (“Japan ­ Food Retail”). Some of Trader Joe’s smaller packaged goods would also appeal to Japanese consumers, since they prefer consumption in smaller servings. As for Japanese consumer taste preferences, they prefer milder tastes that are not as overpowering. Therefore, Trader Joe’s would benefit from both dropping its more rich tasting food product lines and developing some local products, specifically meant to satisfy the sensitive Japanese consumer palate.

Private branding of products is becoming hugely prominent in Japan where its use in stores is estimated to rise by 119.51% between 2012 and 2017. Thus, Trader Joe’s would be well off maintaining its private branding structure and taking full advantage of brand loyalty by upholding its consistent brand presence.

As for distribution of the products, Trader Joe’s should look into store locations in residential, neighborhood areas as well as urban areas. With locations in residential areas, Trader Joe’s would be appealing to its brand association to convenience and will be especially accessible to Generation M consumers. Urban areas are also highly attractive Trader Joe’s locations, as distribution infrastructure is likely to be reliable and strong. With high consumer traffic in urban areas, there is also an increased likelihood of consumers coming in/visiting a Trader Joe’s retail store.

Posing as a barrier to entry, the food retail industry holds heavy competition with local and large­scale convention stores that enjoy economies of scale. Being a newly established operation, Trader Joe’s will not as easily enjoy economies of scale and will have to work to maintain low costs and high profit margins. Unlike local competitors, Trader Joe’s has the disadvantage of entering a market with no past operation, marketing, or cultural experience in that region to build from. Another barrier includes Japan’s food policies through regulations and agencies such as the Basic Law on Food Safety, Consumer Affairs Agency, and the Office of Food­Borne Disease Surveillance. Fortunately, Trader Joe’s can exploit health regulations as a

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strength since it already complies with such laws. Trader Joe’s also needs to attain long­term supplier contracts to secure steady product supply and quality (“Japan ­ Food Retail”).

Through recognizing these restrictions, it is suggested that Trader Joe’s enters the Japanese market through wholly owned subsidiaries via acquisitions or mergers. Wholly owned subsidiaries have more flexibility and control over operations and can capitalize on the fact that Trader Joe’s is very different from other competitors. Higher control allows the company to monitor managerial actions abroad to make sure its image and company culture is accurately represented. Furthermore, acquisitions and mergers allow executives in Japan to give Trader Joe’s knowledge about the market. Trader Joe’s could easily investigate acquiring a willing, family­owned business and maintain good public relations with the community by keeping current employees and investing in employee training.

To remain consistent with its premium positioning, Trader Joe’s should charge a premium price. Although low price leadership is highly relevant in the competitive Japanese food retail market, Trader Joe’s can avoid such dangers because it is a uniquely differentiated specialty retailer.

Being in a high context culture, building up the Trader Joe’s brand will require significant financial and time investments. Thus, promotional marketing campaigns should start before Trader Joe’s stores open in Japan to pre­establish a consumer familiarity with the company and generate excitement for the new store. Such a promotional strategy will involve a significant amount of adaptation, as Trader Joe’s does not currently highlight its marketing tactics. In such marketing strategies, importance should be placed on building strong and loyal relationships with prospective customers. Trader Joe’s excellent services and employees should be a large component of its marketing platform.

As Japan has a developed media infrastructure, Trader Joe’s should consider all forms of promotional communication: TV ads, newspapers, magazines, radio stations, etc. A great promotional opportunity that Trader Joe’s could utilize is hosting store opening events that encourage and entice consumers to visit Trader Joe’s locations and purchase goods. Value discounts, special/one­time­only cooking events, or meet and greets with the employees are just a few of the many promotional ideas that Trader Joe’s could take advantage of. Analysis of International Market 2­ Australia

Australia is another market of consideration for Trader Joe’s entry. Although Trader Joe’s does not currently operate within Australia, secondary data and STP analysis indicate that this market is optimal for Trader Joe’s expansion.

General demographic trends indicate that Australian citizens enjoy high incomes, standards of living, education level and focus on physical fitness. They also have taste preferences for American food cuisines and enjoy trying new things. Since Australian citizens value health and are open to Westernized ideas, Trader Joe’s organic foods would introduce an appealing variety to consumers’ diets. In addition, Australians focus less on customer service and more on the product. Therefore, Trader Joe’s would have to adapt their customer service base and make the shopping experience more customized towards these Australian preferences. Such fairly consistent market traits, with a few easily addressable challenges indicate Australia as a highly optimal market entry candidate.

The target market that Trader Joe’s should reach are the middle to upper class Australians living in urbanized cities such as Sydney. Even though the prices are higher due to import costs,

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the residents who live in the suburbs around metropolitan areas live comfortable lifestyles and earn higher incomes and minimum wages compared to the United States. According to a recent article, it was said that “the standard of living in Australia is comparatively higher than the rest of the world...Australia has one of the most prosperous economies in the world. This economic growth is also well reflected in the lifestyle of people. Cities like Melbourne and Sydney have an eclectic and vibrant lifestyle” (“Standard of Living in Australia”). Some of the suburbs that they could target in Sydney include areas like Newtown, an eccentric suburb that offers a variety of international restaurants and cuisines. Bondi would be another great area to target since its residents are focused on their health and fitness due to its proximity to the beach. Trader Joe’s would be successful in this affluent area because Australians would spend their income on their groceries. Once Trader Joe’s tests their success in these suburbs, they will eventually be able to spread their stores to other cities.

Unlike the United States and Japan, Australia holds the challenge of consumer preference for lower levels of customer service and involvement. As a whole, Trader Joe’s has gained differentiation from competitors through its high service quality. However, Australian consumers would not appreciate or enjoy these efforts as much as US consumers do. A greater emphasis on customer service could even turn away customers since they prefer lower levels of involvement and emphasize convenience in everyday shopping. Their desires for convenience supports their preference for grocery stores in close proximities to their homes­­the placement of the stores should be within walking distance or only require a short, easy commute.

Similar to the United States, Australia is also considered a diverse consumer melting pot. This is due to the huge migration rate from various countries around the world. “Australia’s high living standards and facilities are [another] reason why the country attracts such a huge number of foreigners each year” (“Standard of Living in Australia”). Australian consumers have similar tastes to Trader Joe’s American consumers. Therefore, little costs would be needed to adapt products to Australian tastes and Trader Joe’s could use information from its current R&D set­up to further verify consumer tastes. Potential threats in the Australian market also arise from established supermarkets, such as Cole’s and Woolworth’s and health food markets (Barlacto, “Market Power in the Australian Food System”). They make up about 80% of the supermarket market share. Cole’s with 37%, Woolworth’s with 43%, IGA with 13%, and Aldi, a brother company of Trader Joe’s, has 3%. This leaves only 2 % for incoming companies. (Appendix: Table 3) Australia also shows concern with ongoing free trade agreements and the emergence of low cost competitors from China, South Africa, and South America that could flood the market with cheap imported foods and cut into local profits (“Opportunities and Threats”).

With Trader Joe’s emphasis on local products, the drastic climate changes in Australia could hinder food production. Since the 1970s, Australia has experienced more intense droughts and extreme rainfall events in the northeast and southwest areas of the country (“People, Culture and Lifestyle”). This could affect the quantity and quality of primary products.

Regardless of the threats that Australia faces, they also have a large window of opportunity and growth. Trade Joe’s could take advantage of the country’s recent interest in local products and farmers markets. In the year 2000, no farmers markets existed in Southern Australia or Victoria, but by 2010, 70 farmers markets regularly operated in the areas. (Ross, “Food Consumption”). The government is also catching interest in supporting healthier diets and lifestyles that Trader Joe’s offers after the Organization for Cooperation and Development displayed trends of increased obesity. In addition, Australia shows growing trends in specific

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product categories of cereal, wheat, rice, and corn in Australian diets. Trader Joe’s could respond to the trends by focusing on developing and promoting these particular products. Though such items lean more towards being commodities, Trader Joe’s could get ahead of the market by launching niche products that fit into these categories by branding them as cultural, Australian foods.

In order to promote Trader Joe’s in Australia, the company could enhance its in­store experience without increasing the amount of customer service provided. This could be achieved by creating the suggested in­store wifi app that could offer its “Fearless Flyer” and item locators. Customers will be able to find what they need quickly without the help of employees. It will be up to their discretion on how they would like to receive help since culturally, they do not prioritize customer service as part of their shopping routine. This will also decrease the amount of labor costs needed to run the store, all while adhering to the customer’s preference of not being bothered by excessive customer service. Although, Trader Joe’s already utilizes very limited marketing, the company would have to make it even more subliminal in Australia; marketing tactics must be more seamlessly integrated within the Australian cultural and marketing preferences. Trader Joe’s could also make its stores a familiar and friendly environment for shoppers. By decorating it according to a jungle theme similar to the stores in the United States, the Australians would most likely be receptive to this fun environment. They could also add scavenger hunts for the children, which have been successful in the American stores. This scavenger hunt may consist of children searching for a stuffed animal kangaroo around the store as they shop with their parents or guardians. The winners could receive a prize when they tell a sales associate where the hidden animal is located. This marketing technique makes the in­store experience not only fun for children but for adults as well. Kids will be begging their parents to take them to Trader Joe’s­­a strong pull promotional strategy.

Overall, we recommend the expansion of Trader Joe’s into the Australian market. Despite the few threats and adaptations needed, Trader Joe’s would thrive in a more relaxed and accepting environment. With Trader Joe’s strong culture and focus on quality, the company should be able to adjust to the new environment and culture. Our suggested mode of entry in this market, would be to sanction a wholly owned subsidiary via an acquisition/merger. This will allow Trader Joe’s to have more control over its firm’s operations, as well as, use local expertise to its advantage. Being in control will allow Trader Joe’s to be certain that its company is being appropriately represented. Having acquisitions and mergers gives the company an upper hand because authority over operations lies with both Trader Joe’s and the acquired, knowledgeable local firm. Also, since the local firm’s employees already are accustomed to the relaxed retail culture and low focus on customers, Trader Joe’s could save the efforts of having to re­train its own personnel on these cultural differences. Conclusion After in­depth research and analysis, it is recommended Trader Joe’s begins its international expansion into the specified target markets in Japan and Australia to experience success and profits. Both Japan and Australia, although quite different from one another, have attributes that will work well with Trader Joe’s overall culture. These countries would have to go through adaptations and standardizations but the international expansion would be beneficial to Trader Joe’s growth. Japan and Australia would serve as the best target countries due to their high income and education levels as well as their health conscious consumers. It is recommended

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that in Japan, Trader Joe’s should expand on its customer services while in Australia, Trader Joe’s should focus on creating a new marketing strategy to attract consumers. Trader Joe’s unique culture and the “Fearless Flyer” should be brought from the American stores and standardized within the Japanese and Australian stores.

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Appendix Table 1

Table 2

Table 3

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(Mortimer) Table 4

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Table 5

Table 6

(Ross)

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