International Marketing Strategy Report - Argentina PDF

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International Marketing Strategy Report for the country of Argentina
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International Marketing Strategy Report International Marketing, Section 1

Country: Argentina

Table of Contents

Executive Summary

Page 3

Target Market Characteristics Page 4-6

International Product Strategy Page 6-8 International Place Strategy Page 8-9 International Promotion Strategy Page 9-10 International Pricing Strategy Page 11 Summary and Conclusions

Page 12

References

Page 13-14

Appendices

Page 15

Executive Summary Target Market: This section provides reasons as to why our cereal is targeted towards young to middle aged adults. With limit to no census data, we use current population numbers to know that our best option is to market in urban areas with consumers who are not yet set in consumer-purchasing ways and are still open to new or innovative products. International Product Strategy: This section discusses our three main components. Here our core product consists of Salud!, a healthy breakfast cereal for adults. The packaging component is simple with earth tone colors, product name, and an image of the cereal. The support and service component provides easy to read nutrition labels, product facts, & manufacturer contact information. Reasons as to why the product is placed in the middle of the continuum as opposed to either end are also discussed. International Place Strategy: Here we discuss our product being placed in markets such as Carrefour in order to help shorten our channel. Also discussed is the use of the Port of Buenos Aires and the Port of La Plata to reach over 90% of the population. International Promotion Strategy: Here we discuss the use of Argentina’s football team and the Argentine Medical Association to bring awareness to health and how our cereal can help. Also discussed how we will implement on the ground marketing, use of coupons, and publicoche. International Pricing Strategy: Here we discuss our decision to utilize variable cost pricing due to the current low consumption of cereal in Argentina and use of penetration pricing which we may later change based on product sales. Also, we discuss the use of the La Plata Free Trade Zone in order to avoid price escalation, decrease parallel import issues, and shrink our cost of distribution. Summary and Conclusions: In closing we address the importance of our cereal, how it will help Argentina’s citizens, and how we plan to overcome current international obstacles in order to become a successful brand of cereal.

Target Market Argentina is a country with a population of 43 million with subsets of every kind. For the purpose of this paper, we will break down the population into age groups and decide which age range would most benefit from and use our product. Argentina's population is broken down in the following way, 24% of their population is between the age of 0-14, 15% between the age of 15-24, 39% 25-54, 9% 55-64, and 11% 65 and over (CIA World Factbook). We will be focusing our efforts on the ages between 15-45.The reason we have decided to go with these two markets is based on our findings from our previous reports that told us that about 90% of the population in Argentina is Catholic and as a result tend to be conservative and set in their ways. Since our product is a little on the newer or stranger side of the spectrum for this country, we feel that it’s best to try and market this product to the younger side of the age bracket. We came to this conclusion due to the fact that the youth in Argentina is much more likely to break the mold of the country's norms and forge their own paths. We have already seen proof of this with the decline in legal marriages and the adoption of common law marriages, as well as an increase of children born out of wedlock or no desire for children at all, and the fact that young adults are leaving home at much earlier ages. At one point in the country's history these things were seen as completely unacceptable but because of the younger generation things are slowly changing and will continue to do so. By addressing the younger population we will place ourselves in their lives early on and hopefully, start a chain reaction that will lead to the consumption of our products for generations to come and can become the new norm. Also, since our product is made for eating we will not focus on one specific gender but will market to everyone.

The size of this target audience is somewhere between 6 million and 24 million according to the CIA World Factbook that tells us the population number for the age group 15-24 is 6,773,344 and for ages 25-54 is 17,221,346. Unfortunately, without access to census data for every single person in the country, we can't truly know how much of the population is between our target market of age 15-45, so this information will have to do for the purpose of this paper. As mentioned earlier in this section the main reason we have decided to go with this target market is that they have shown characteristic of willingness to change or at least try new things. For that reason, we can address this market as the emerging modern sector of Argentina. As opposed to their traditional counterparts that are very set in their ways and are unwilling to change how they live their lives. And from our standpoint that's fine since the conservative traditional sector in Argentina is made up of the older ages of the population which have the smallest percentage of the overall country population. Since one-third of the population in Argentina lives in Buenos Aires and similar types of cities we will focus on Urban residents who don't have a lot of time to spend making big breakfasts and could benefit from our cereal. Another reason we have decided to target this product to people 15-45 and not the traditional cereal target market of little children that is usually used in places like the U.S. has to do with two simple facts. One, the birth rate in Argentina has been dropping since a lot of people are either not having kids or are having kids later in life (Edith Alejandra Pantelides,) so it doesn't make sense to market to a target group that is on the decline. Two, we are planning to make a cereal product that is healthy and low in sugars, which aren't the best cereals to market toward children.

Other things to take into consideration about our target market that can impact the success of our cereal in Argentina are purchase history, food norms, and prices. In Argentina the history of cereal is relatively new, it does exist in the country but it is not a commodity that is used by a ton of people. “The per capita consumption of breakfast cereals in Argentina remained very low at only 0.4kg in 2016”(Euromonitor International). That can pose a problem for us because we need to understand why that it and figure out how to market around that barrier. Another thing to acknowledge is that people in Argentina aren't accustomed to eating much for breakfast, we’ll need to figure out how to change that. And lastly, people in Argentina are very unlikely to purchase products that aren't produced in Argentina due to the high import prices. Being that we are a U.S based company exporting our product to Argentina, that can pose some issues, we will need to address that through our channel distribution.

International Product Strategy There are three main components in our cereal product. The first component is the core product which consists of the cereal itself. Our cereal would be differentiated from other cereal products in the United States such as the way you consume it, the design, and health quality since children are not our target market in Argentina. Our cereals would be attractive to teenagers to mid-adult, between 15-45 years old.When people are getting older, they become concerned with what they consume due to limitations of what they can eat such as low sugar, sodium, and carbohydrate. Having analyzed the eating habits of most people in Argentina who are in our target market we have noticed that a huge portion of their diet consists of a lot of beef. This eating pattern is not surprising since the country's largest export is actually beef. However as a result of the large amounts of beef consumption the population in Argentina consumes, they

are beginning to show signs of the health risks associated with eating too much red meat. This is so much of a concern now that the Argentine Government has taken steps to ensure the health of their people by launching a food-based dietary guidelines and food guide they want the population over 2 years of age to follow (Fig.1.). So with that in consideration our cereals would incorporate those guidelines and provide the target market with the nutrition values recommended by their government. The cereal would be a very healthy whole grain cereal with fiber and protein such as nuts or seeds accompanied by some dry fruit and of course milk, which for a country over runned by cows Argentinians don't drink nearly as much milk as they need to. The second component is the packaging. The name of our cereal product is “Salud!” which is a play on words. Salud in spanish directly translates to “health” but in many spanish speaking cultures this world is associated with fun and drinking, a “cheers” of the spanish world if you will. The reason why we chose this name is because we want a name that defines health but still encompasses the spirit and love of Argentina.Wanting to steer away from any bright colors that would potentially group us into the children's cereal category, the color of our box would be done in earthy tones and colors such as light greens, browns, and dark orange colors. On the front of the box, there would be a picture of a white bowl filled with cereal in the foreground, nuts,wheat stocks, and dried fruits in the background. The support and services is the last component of our product. Our product would have a label of nutrition facts on the back of the package including “energy from fat, total fat, saturated fat, cholesterol, sodium, carbohydrate, fiber, sugar, and protein” (Schwartz, Vartanian, Wharton, & Brownell, 2008). We would also provide little facts about our product. For example, where the

ingredients come from, and the production process. Also, we would list our contact information in case the customers have questions or concerns about the product. Our cereal products would be in the middle of the continuum. The reason why we choose to place it in the middle is that this product is a food and it’s a basic commodity type product. It would be unappropriated if we placed this on the insensitive side (left side) because our product has nothing to do with industrial products. On the sensitive side (right) would also be inappropriate because cereal product does not link with any cultural value. However this is not to say that our product will be accepted easily in Argentina. Even though the country does have a small segment of cereal products available they are not very commonly consumed and are not associated as a breakfast food. We will still need to get around the fact that a typical breakfast in Argentina is only a cup of coffee and a piece of sweet bread. Hopefully following the government's food guidelines and increasing the awareness of how important it is to have a balanced food intake we can change the association the people in Argentina have with cereal.

International Place Strategy As mentioned in our previous paper, the biggest concentration of the population (one-third) lives in Buenos Aires. Overall, ninety percent of the population lives in urban areas which means that the product will be easier to distribute. Since we are selling a consumer food product the most ideal way to distribute our product would be through outlets such as supermarkets or hypermarkets. There are other food retail market categories like “mom and pop” shops or self serve mini-marts and drugstores that we could distribute through but consumers prefer supermarkets or hypermarkets. They prefer these because of the weekly and monthly discounts offered to them by the big supermarkets. This would also ease Argentinian’s

unwillingness to buy imported products because of the discounts that would be offered (Argentina 2017). The country’s leading mass distributor of consumer products is the French company Carrefour. Carrefour, in total, has over 500 super markets and over 300 hypermarkets spread all around Argentina making them the ideal partner. If we use Carrefour we would be shortening our channel length since distributing through smaller shops throughout the country would mean that we would have to go through more than one entity. Using Carrefour as our distributor would give us the advantage of being able to reach other smaller cities outside of Buenos Aires. It would also give us the advantage of more efficiently distributing “Salud!” t hroughout Argentina (Selling 2017). Seventy percent of Argentina’s foreign imports are carried by ship, therefore the best option would be for our merchandise to be imported using that method as well. We would be using the country’s biggest ports, the Port of Buenos Aires and Port of La Plata. These ports are also well connected to the ports located internally making it easier to distribute (Argentina 2015). Overall we would be able to reach over 90% of the population by using this place strategy and partnering up with Carrefour.

International Promotion strategy Since our cereal product, “Salud!” , is a health conscious product with an emphasis on fun and enjoyment it would be appropriate to apply an international and global marketing mix.

According to chapter 16 in the seventeenth edition of our textbook, social media users in Argentina spend about 11 hours a day on mobile devices, apps, and more (Table 1). This means as marketers we should look for ways to incorporate brand awareness through the internet. Establishing social media pages, such as Facebook and Twitter, will assist in reaching this large group of consumers. To reach our mid-aged adults this cereal is geared towards we will also send coupons through the mail to use during the first few years of selling in order to gain consumer interest. Following that we will have our marketing teams set up taste-tester booths at supermarkets such as Carrefour for on-the-ground marketing. We can easily reach customers here as well as answer consumer questions in person, provide samples, and give out flyers and coupons. As a way to help our consumers increase their income, we will also use publicoche  in which car owners will act as moving billboards with “Salud!” advertisement on them in order to reach additional consumers we may otherwise overlook. We are looking to pay each participant $150 per month as long as they provide a guide of their regular driving pattern that is in the area of our desired target market. Lastly, we understand that soccer is very popular in Argentina. Therefore, we will work towards sponsoring the Argentina national football team,La Albiceleste, translated as the white and sky blue. To keep in mind the main focus of health among our consumers, we propose to work with the soccer team in conjoint with the Argentine Medical Association. Also headquartered in Buenos Aires, the association can tackle the urge for citizens to be more healthy with the country’s popular sport that requires you to be healthy to properly play in order to get consumers to care more about their diet and ultimately purchase our cereal.

International pricing strategy The per capita consumption of breakfast cereals in Argentina remained very low at only 0.4kg in 2016, below countries including Chile or Mexico (Euromonitor International) . Since Argentina is not a big consumer of breakfast cereal and the market is poorly developed we are going to use variable cost pricing. People aren’t going to be willing to pay full cost since cereal is not a popular food in Argentina and the market is basically non-existent. In country markets experiencing rapid and sustained economic growth, and where large shares of the population are moving into middle-income classes, penetration pricing may be used to stimulate market growth even with minimum competition. Since it is a somewhat new product we will start with penetration pricing strategy and depending on how the product does in the market in a couple of years we might use skimming pricing strategy. There are issues concerning parallel imports. Argentina has one of the biggest markets for pirated goods c alled La feria la Salada it employs 40,000 people and generates $40 million per year( The Role of Law). According to Forbes, the reason La Salada came to be what it is is because of the  devastation of the national textile and clothing industry. When the government opened up the country to foreign firms and imports, the large migration from mostly Bolivians in the 1990s made Argentina's cities experience a population increase.To  address possible different sources of price escalation we will be using this trade zones. We plan to use The La Plata free trade zone. La Plata inaugurated  in 1997 in Buenos Aires. It is the most important free trade zone in Argentina due to its proximity to the capital and the Ezeiza International Airport. Using this trade zone will lower the cost of the distribution process because it is in Argentina’s capital city and located near the airport which will allow us to keep our prices low.

Summary and Conclusions In conclusion, Salud! i s a different kind of cereal needed in Argentina right now. With a rising issue of improper diet among Argentinean adults, this cereal will help provide the needed and or missing nutrition in a quick and simple way. With the issue of entering into a foreign market, we understand the obstacles we must overcome. We understand that on-the-ground marketing as well as vehicular billboards and coupons will be much more helpful in this country than in the U.S. We also understand that as an incoming foreign cereal we cannot charge our desired price for our product but instead do what is best for our consumers in order to gain their trust and create brand loyalty. Though we may face international restrictions, higher costs, and parallel imports, we know that our persistence will surely make us a leading cereal brand in Argentina.

Appendix

Figure 1. Guías alimentarias para la población Argentina (translated to Dietary guidelines for the Argentinian population) (Source: Food and Agriculture Organization of the United Nations)

Table 1: Top 10 Social Media Users: Average Time Spent on Social Networking Sites, October 2011 (hours per user) (Source: Michael Jung, “Social Networking is the Most Popular Online Activity”)

References Schwartz, M. B., Vartanian, L. R., Wharton, C. M., & Brownell, K. D. (2008). Examining the Nutritional Quality of Breakfast Cereals Marketed to Children. Journal Of The American Dietetic Association , 108( 4), 702-705. doi:10.1016/j.jada.2008.01.003 “Argentina.” Food and Agriculture Organization of the United Nations, www.fao.org/nutrition/education/food-based-dietary-guidelines/regions/countries/argenti na/en/. Breakfast Cereals in Argentina, www.euromonitor.com/breakfast-cereals-in-argentina/report. Ariana, Nina, et al. “Studies Suggest Argentines Eat Too Much Meat, Not Enough Vegetables.” Bubblear.com, 17 Aug. 2016,

www.thebubble.com/studies-suggest-argentines-eat-too-much-meat-not-enough-vegetabl es/. Central Intelligence Agency. (2016). Argentina. In The world factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ar.html Free trade. (1997). Presidents & Prime Ministers, 6( 4), 16. Sassen, S. (2011, August 09). La Salada: The Largest Informal Market In South America. Retrieved November 28, 2017, from https://www.forbes.com/sites/megacities/2011/03/28/la-salada-the-largest-informal-market-in-so uth-america/#1a70835f7d46

Argentina: Distributing a product. (2017). Retrieved from https://en.portal.santandertrade.com/analyse-markets/argentina/distributing-a-product Selling U.S. products and servi...