mkt415 chobanibrazil

MKT 415CHOBANI - Brazilian Market Launch Alexander Collar et al. May 6, 2015 1 Executive Summary This report was drafted to explain the benefits and strong market potential for Chobani to enter the Brazilian yogurt market. The market research reveals that there are over 200,000,000 residents of Brazil. From this 200,000,000 people our segmentation strategy allows for us to target 8 percent of this total, which is nearly 16 million citizens. This allows Chobani to target a broad range of demographics to allow for radical expansion and entry. In addition, only two main competitors exist in Brazil; Nestle and Danone. Combined they account for only 21 percent of the market share. Chobani has a favorable positioning strategy when focusing its efforts against Nestle and Danone. Chobani differentiates itself by having more than double the protein content of any competitor in the Brazilian market, and using all natural ingredients. The process of how it’s made will position Chobani as the healthiest yogurt product, which will allow them to enter the market at a premium, competitive price. Immediately this will impact market share and global sales. Not only has this report developed an extensive segmentation, targeting, and positioning plan, but also it explains in precise detail features of its product introduction, promotional plans, outlets of distribution and price. This report advises that partnering with local distribution centers and advertising agencies, Chobani can effectively exploit any cultural boundaries that may exist. Chobani’s entry into the Brazilian market is almost inevitable given the recent growth in its yogurt industry. This report carefully outlines all components of a successful marketing launch plan to enter this market not only easily, but also with force. Because, how it is done, matters. 2 Table of Contents CIC Analysis Report 4 . . . . . . . . Domestic Company Analysis 8 . . . . . . . . Global Company Analysis 14 . . . . . . . Industry Analysis: Five Forces Assessment 15 . . . . . . . Country Analysis: Brazil 23 . . . . . . . Foreign Market Entry Assessment Market Segmentation, Targeting, Positioning 26 . . . . . . . Market Segmentation 28 . . . . . . . Targeting 31 . . . . . . . Positioning Strategic Marketing Program 36 . . . . . . . Product 38 . . . . . . . Pricing 40 . . . . . . . Distribution and Place 41 . . . . . . . Promotion 44 . . . . . . . Brazil Integrated Marketing Communication 45 . . . . . . . Conclusion References 3 Domestic Company Analysis: Chobani LLC was first established in 2005, when Turkish immigrant Hamdi Ulukaya purchased a yogurt factory from Kraft in South Edmeston, New York. The company was built on the founding mission to provide better food to more people, with a belief that access to affordable, nutritious, delicious yogurt made with only natural ingredients is a right, not a privilege. The company operates under their “Nothing but Good” philosophy, which includes supporting local farmers, job creation, and community outreach.1 By the end of 2012, Chobani became the number three best selling yogurt company in the U.S., with $745.6 million in retail sales, which represented 15.7% of all yogurt sales in the U.S. for the year.2 Chobani is a relatively young company. Chobani currently operates in 3 different locations. Its origins began in New York and it has since expanded production to Idaho and Australia. Chobani has quickly become the Greek yogurt market leader in the United States and is searching for future expansion. One possible market is Brazil. Brazil has been pinned along with Russia as the next best suitable option for the yogurt industry to expand its operations.3 Brazil has the largest economy of any Latin American country and they are the world’s seventh largest economy and fifth largest population at approximately 200 million. Brazil also has the largest GDP of any Latin American country. In terms of demographic, Brazil is now largely dominated by its middle class. However, the perception of Brazil is that it is an emerging economy with a large 1 "Chobani - Beliefs." Chobani. Chobani LLC, 2015. Web. 28 Feb. 2015. 2 Needleman, Sarah E. "Old Factory, Snap Decision Spawn Greek-Yogurt Craze." WSJ. N.p., 20 June 2012. Web 3 "Research and Markets: Yogurt in the BRIC (Brazil, Russia, India, China) Countries Market Overview and Forecasts to 2014." Reuters. Thomson Reuters, 10 Jan. 2011. Web. 01 Mar. 2015. 4 group of people that can be categorized as wealthy.4 This overall increase in wealth has resulted in increased spending and increase thought to daily food consumption. Directly related is the increased prosperity/emerging middle and upper class that is causing a health trend among Brazil citizens. The rising numbers of obesity and urban living are resulting in tendencies to buy health products. This new fond consumption pattern looks favorable for Chobani’s expansion efforts. The term “functional foods” has grown quite popular in Brazil. Functional foods represent anything that has health benefits and nutrients.5 Brazil’s overall population is aging quickly and many have health issues, in specific slow intestinal transits, which have been cited as a major health issue among Brazilians.6 This has caused a desire for increased functional foods, such as yogurt products that contain probiotics. Probiotics are cells that essentially aid the digestive and immune systems.7 Another health concern that Brazilians are currently facing is an increase in obesity. Due to the growth of fast food and highly processed foods being easily available and convenient, the obese population has grown significantly. As a result, people are now beginning to search for healthy alternatives. The yogurt industry in Brazil has yet to reach its potential. An attractive quality for Chobani regarding the yogurt market in Brazil is that it has not reached maturity yet, which indicates a strong potential for future profitability and market entry. Two foreign competitors control the majority of market share. The top competitors in the Brazil yogurt market are; 4 Market Analysis Report. "Market Analysis Report." Health and Wellness Trends in Brazil (n.d.): n. pag. June 2010. Web. 5 de Barcellos, Marcia, AND Lionello, Rafael. "Consumer Market for Functional Foods in South Brazil" International Journal on Food System Dynamics [Online], 2 5 Dec 2011 6 Market Analysis Report. "Market Analysis Report." Health and Wellness Trends in Brazil (n.d.): n. pag. June 2010. Web. 7 DE ALMEIDA, M. H. B., ZOELLNER, S. S., DA CRUZ, A. G., MOURA, M. R. L., DE CARVALHO, L. M. J., FREITAS, M. C. J. and DE S SANT’ANA, A. (2008), Potentially probiotic açaí yogurt. International Journal of Dairy Technology, 61: 178–182. doi: 10.1111/j.1471-0307.2008.00390.x 5 Danone SA, and Dairy Partner Americas/Nestle and Fonterra.8 Both companies’ successes are due largely in part to both having probiotic yogurt products. Analyzing the two main players in greater detail, each has achieved success in their own ways. Danone is the market share leader with 14%, and leads every region of Brazil besides the Northeast. Danone has existed in Brazil since 1970. Their main product line is Activia, which accounts for one-third of all yogurt product sales in Brazil. They have cited their success due to four main marketing factors. People development, portfolio management, the sales force machine, and the strong operations machine. Behind each factor is strong senior management, a strong entrepreneurial spirit, a dominant sales force, and increased focus to operations and supply chain capabilities.9 In fact, to increase its operations in the Northeast, Danone has recently opened a new plant in Maracanau to reduce lead times.10 Dairy Partners Americas is the other dominant player in the Brazilian market. Brazil is the second largest market to China that Nestle caters to for adult dairy products. They cite that their product lines are well positioned to cater to “goodlifers,” which makes them an excellent product choice in Brazil. Goodlifers are those age 50 and above.11Their well-positioned products are due to the fact that, similar to Danone, they have probiotic dairy products that aid in heart, bone, joint, and digestive health.12 The two main product lines in Brazil include Aticol and Molico. Aticol is aimed at addressing heart health, while Molico targets bone and joint health. 8 Market Analysis Report. "Market Analysis Report." Health and Wellness Trends in Brazil (n.d.): n. pag. June 2010. Web. 9 Braziil. “Danone in Brazil.” 2012. PDF. http://media.corporateir.net/media_files/IROL/13/131801/presentations/16-NOV2012_M._LOZANO_E.__GIACOMINI,_M._CAMARA_&_M._BORGES_-_Danone_Brazil.pdf 10 "BRAZIL." Our Key Markets. N.p., n.d. Web. 02 Mar. 2015. 11 "Nestlé Good Lifers - What Could Nestlé Do to Help People in Their Fifties Have a Good Life? EYeka." EYeka. N.p., n.d. Web. 02 Mar. 2015. 12 Nestle. “Nestle Dairys New Frontier: Healthy Ageing.” 2012. PDF. 6 With a shift in focus to healthier alternatives, both products are expected to see growth in sales over the next five years.13 Chobani went from being an unknown greek yogurt producer to quickly becoming the number one greek yogurt product in the United States in 2010. Chobani separates itself from its competitors by quickly innovating before competition, such as Danone, has time to react. By the time Danone began to increase their promotion of greek yogurt, Chobani had already introduced two new product lines; Chobani Bites, and Chobani Champions. Chobani Bites are little 3.5 ounce yogurt cups intended for snack time. Chobani Champions is a tube yogurt, similar to the “GoGurt,” that targets children. They made it in smaller portions, and made them pre-blended in an assortment of flavors to make it kid-friendly.[xv] Chobani also differentiates itself from competitors through its authentic straining process. The straining process explains how Chobani achieves high protein content, between 13-18 grams of protein per cup. [xvi] This straining process also allows for any excess whey to be removed.[xvii] Chobani also appears to be the healthiest form of any greek yogurt. It contains no artificial flavoring, preservatives, and is free of milk protein concentrate. They use only natural ingredients and real fruit.[xviii] Chobani is also probiotic, containing three different cultures. It contains “Lactobacillus bulgaricus and Streptococcus thermophilus, which are required by USDA standards to produce yogurt” as well as the “probiotic cultures of Lactobacillus acidophilus, Bifidus and Lactobacillus casei.”[xix] These probiotic cultures are present in the products of the main industry leaders in Brazil, which is a strong reason why Danone SA, and Nestle lead in market share. This means that Chobani will have less difficulty entering this market since no new formula or processes need to be made in order to appeal to the Brazilian consumers. Chobani has taken various marketing initiatives to build their brand and ascend to the number one ranking in the United States. Their first major 13 Nestle. “Nestle Dairys New Frontier: Healthy Ageing.” 2012. PDF. 7 effort was a mobile tour campaign in 2010. Chobani had been on the shelves for three years at this point and decided it was appropriate to start the “CHOmobile Tour.” In order to create brand awareness they traveled across the country delivering samples to potential consumers. Other marketing efforts include two national advertising campaigns, the first being in 2012, and the second in 2013. The first campaign was a joint marketing effort as Chobani was one of the major sponsors for the 2012 Olympic games. They tailored their campaign slogan to the Olympic games, the slogan being “Win The Day.” Following the launch of their nationwide campaign, Chobani opened their first brick-and-mortar store as a testament to their growth and stability as the number one greek yogurt distributor in America.[xx] Since the inception of Chobani, another efforts and trends they have followed is the efforts toward social responsibility. Chobani founded the “Shepherds Gift Foundation,” otherwise known as the Chobani foundation, which gives 10 percent of all Chobani profits to charity. They are strong believers in giving back to the community and empowering youth. Global Company Analysis: Foreign Operations Chobani first established an international presence in June 2011, when the company acquired Beads Foods, an Australian manufacturer and distributor of a wide range of dairy products, including the popular Gippsland Dairy Brand.14 In November 2011, Chobani officially debuted its Greek-style yogurt in seven flavor variations in Woolworth stores, Australia’s top supermarket chain, in New South Wales, Australia. According to CEO Hamdi Ulukaya, the company’s goal was to grow the yogurt category in Australia, and bring Chobani to all of 14 "Chobani Announces First International Distribution." -- NORWICH,N.Y., Nov. 16, 2011 /PRNewswire/ 8 Australia.15 On December 5, 2012, Chobani opened a $30 million yogurt factory in Dandenong South, Australia. Chobani’s Australian sales soared upon the opening of the Victorian plant, as the company soon became the fastest growing yogurt brand in Australia. Within a year of the plants opening, Chobani became the second best-selling yogurt brand in Woolworths. By the end of 2013, one in every five Australian households had a cup of Chobani in their fridge.16 In November 2011, Chobani initiated their expansion into Canada, debuting five flavors of their Greek-style yogurt at a variety of Loblaw banner stores in the Greater Toronto Area. Chobani was initially granted two short term permits from the Canadian Government to import their products from the U.S., with their second permit set to expire in February, 2013.17 In December of 2011, Chobani’s announced that their building plan had been approved by the Ontario Government to construct a $76 million production plant in the area. However, Chobani soon ran into issues in Canada, beginning with their inability to establish a long term milk supply, as the Dairy Farmers of Ontario committed to supply the company with milk for only a one year period. Furthermore, Canada’s strict dairy supply management system limited the production of yogurt in the country, as the total amount of yogurt allowable is strictly controlled by a processor plant quota system, which assigned milk based on recent production levels. A November 2012 meeting between producers, processors, and government officials ultimately 15 Paish, Matt. "Chobani Hopes to Bring U.S. Greek Yoghurt Boom to Australia." Chobani Hopes to Bring U.S. Greek Yoghurt Boom to Australia. N.p., 10 Nov. 2011. 16 Roper, Peter. "Chobani's Australian Story: Sampling, Social Media and a Russian Air Force Plane Marketing Magazine." Marketing Magazine. N.p., 17 Sept. 2014. 17 Briggs, Nicki. "Chobani, America's Most Loved Yogurt, Now in Canada." CNW Group. N.p., 16 Nov. 2011. 9 failed to resolve the issue, and in January 2013, Chobani officially announced their withdrawal from the Canadian market.18 In 2012, Chobani expanded into the United Kingdom, debuting their Greek-style yogurt in 200 Tesco stores. The company exported their products into the UK from their New York production plant.19 Chobani’s issues in the UK began in early 2013, when the company’s Greek competitor Fage, maker of "Total" Greek yogurt, filed a case against Chobani in London’s High Court. Fage accused Chobani of deceiving consumers in England and Wales by passing off American-made yogurt as made in Greece, due to the products label displaying “Greek-Yogurt". In March 2013, after a seven-day trial the court ruled in favor of Fage, claiming the text on Chobani’s yogurt pots revealing the product was made in the U.S. was too small. Chobani was therefore banned from using the term “Greek-Yogurt” to market its product in the UK, which resulted in the company changing the package label to “Strained-Yogurt”.20 In November 2014, Chobani began to pull their yogurt off the shelves in the UK, announcing that they intended to establish manufacturing operations in the UK, and would be temporarily withdrawing from the market until they could get a local production base up and running.21 Core Competencies and Competitive Advantages One of Chobani’s competitive advantages that set the company apart from competitors in the industry is their established brand image in both the U.S. and international marketplaces. Chobani has achieved their reputable status among consumers due to their ability to consistently 18 Cumming, Ian. "Banned in Canada." Financial Post Banned in Canada. Financial Post, 8 Jan. 2013. Web. 19 Russell, Michelle. "UK: Chobani Eyes Europe Expansion on UK Launch." ProQuest. Just-food Global News, 10 Sept. 2012. Web. 20 Trotman, Andrew. "Chobani Misled UK Shoppers into Thinking Yoghurt Was Made in Greece." The Telegraph. Telegraph Media Group, 28 Mar. 2013. Web. 21 Astley, Mark. "Chobani Begins UK Withdrawal Ahead of 'locally Sourced' Yogurt Relaunch." DairyReporter.com. N.p., 27 Nov. 2013. Web. 10 provide customers with a product that is superiorly valued for its great taste and healthy ingredients. In order to create this value, Chobani focuses their efforts on producing yogurt that contains real fruit, probiotics, possesses a low fat content, is hormone free, and contains twice the amount of protein as regular yogurt. Chobani’s reputation in the U.S. as the elite producer of Greek Yogurt is also credited to their ability to achieve a first-mover advantage in the country, by becoming the first Greek-yogurt producer in the U.S. to position their product outside of the niche marketplace that Greek Yogurt was previously restricted to.22 Chobani’s ability to appeal to the mainstream before competitors is why the company is largely credited for initiating the “Greek Yogurt Craze” in the U.S., which saw sales of Greek-style yogurt rise 203% between 2009 and 2010.23 A second competitive advantage Chobani possesses is their unrivaled and unique emotional bond with their customers. Chobani creates a strong connection with their customers through their savvy use of social media, and their creative marketing efforts. Chobani currently has 600,000 friends on Facebook, more than food industry giants Nestle and Green Giant. The company makes it a point to respond to every single customer inquiry, and takes every opportunity they can to delight their fans, often by engaging in conversations, or acknowledging their Twitter posts and Facebook comments.24 Company founder and CEO Hamdi Ulukaya explained the value he places in keeping in direct contact with customers, saying, “I don’t believe in customer research. We just listen directly to consumers. All feedback on our website comes directly to my BlackBerry. Complaints are not a bad thing”.25 Chobani truly values the 22 Prasso, Sheridan. "Chobani: The Unlikely King of Yogurt." Fortune. N.p., 29 Nov. 2011. Web. 23 Silverstein, Barry. "It's All Greek to Yogurt Lovers." BrandChannel.com. N.p., 17 Feb. 2011. Web. Greengard, Samuel. "How Chobani Yogurt Used Social Media to Boost Sales." Entrepreneur. N.p., 16 Sept. 2012. Web. 25 Prasso, Sheridan. "Chobani: The Unlikely King of Yogurt." Fortune. N.p., 29 Nov. 2011. Web. 24 11 opinions of their customers, and in numerous occasions have launched new flavors due to requests they received from customers via social media.26 Chobani further fortifies this unique bond with their customers through their effective marketing campaigns. An example of this is Chobani’s 2011 Real Love Stories campaign, which encouraged fans to share their love for the brand by posting videos, comments, photos, and stories on social media sites. Chobani then featured their fans’ responses in television advertisements and billboards, and held weekly contests where consumers shared their “Chobani Love Story,” and prizes were given out to the most liked posts. The Real Love Story campaign was considered an enormous success for the company in that it displayed Chobani’s emotional brand-consumer connection throughout the world, creating new fans for the company as well as strengthening the bonds with old ones (Thomas, 2011).27 A third competitive advantage for Chobani comes from their partnership with the Olympics. Chobani’s partnership with the Olympics began in 2012 when the company became a sponsor of the U.S. Olympic and Paralympic athletes for the London 2012 Olympic and Paralympic Games (Greengard, 2012). The company then served as a sponsor of the United States at the 2014 Sochi Olympics, and in September, 2014, the company’s Olympic sponsorship was extended through 2020, making Chobani the official sponsor of the U.S. Olympic team for the 2016 Olympic Games in Brazil, as well as the 2018 games in South Korea, and the 2020 games in Japan.28 Chobani’s partnership with the U.S. Olympics provides the company with a significant sports marketing presence through mass promotions via digital media, print, social 26 Roper, Peter. "Chobani's Australian Story: Sampling, Social Media and a Russian Air Force Plane Marketing Magazine." Marketing Magazine. N.p., 17 Sept. 2014. 27 Thomas, Jon. "Chobani Embraces Digital Storytelling with Real Love Stories." PostAdvertising. N.p., 1 Mar. 2011. Web. 28 Rudy, Melissa. "Chobani Extends Olympic Sponsorship Through 2020." AdWeek. N.p., 26 Sept. 2014. Web. 12 media, and television.29 Such promotions have significantly increased Chobani’s brand awareness, and the featuring of Olympic athletes in the company’s commercials has further reinforced Chobani’s image as a superior producer of delicious and healthy Greek-style yogurt. A fourth competitive advantage of Chobani is their production capabilities. Chobani’s strength in production resides in their efficient yogurt manufacturing facilities, located in New York, Idaho, and Australia. Chobani’s $450 million production facility in Twin Falls, Idaho is the world’s largest yogurt plant, which Chobani uses to supply the western half of the U.S., as well as the Latin American market.30 Chobani’s $30 million factory in Dandenong South, Australia tripled the company’s Australian production to more than 30,000 tons of yogurt per year upon opening in 2012. The company went from making 25,000 cases a week to 25,000 cases per day, fueling Chobani’s rise as the fastest growing yogurt brand in Australia.31 The Australian plant also serves as a portal into the Asian market, as the company began exporting their products into Malaysia from the plant in April, 2014 (Watson, 2014).32 A fifth competitive advantage Chobani possesses is an extensive and innovative product line. Chobani currently has nine different product lines spanning off of their traditional Greekstyle yogurt, all of which are available in a wide variety of flavors. These product lines appeal to a wide variety of consumers, for example the company’s Chobani Indulgent line is a dessert product, and the Chobani Kids line is a high-protein snack targeted towards children. Chobani has proven to have the ability to innovate at a quick pace, releasing four new product lines 29 Greengard, Samuel. "How Chobani Yogurt Used Social Media to Boost Sales." Entrepreneur. N.p., 16 Sept. 2012. Web. 30 "Chobani." Chobani. Chobani LLC, 2015. Web. Roper, Peter. "Chobani's Australian Story: Sampling, Social Media and a Russian Air Force Plane Marketing Magazine." Marketing Magazine. N.p., 17 Sept. 2014. 32 Watson, Elaine. "Chobani Generates Explosive Growth in Australia, Unveils Aggressive Expansion Plans in Asia, Latin America." FoodNavigator-USA.com. N.p., 16 Apr. 2014. 31 13 simultaneously in June, 2014, in a response to increased competition in the Greek-Yogurt category.33 Industry Analysis - Five Forces Assessment: In order to evaluate the competitive environment of Brazil's yogurt industry, an analysis has been conducted on five competitive forces in the industry: rivalry amongst existing competitors, power of buyers, threat of substitute products, power of suppliers, and threat of new entrants. The level of rivalry amongst existing competitors in the Brazil yogurt industry is high, due to a large number of global and local competitors currently operating in the country. International competitors dominated the market in 2014, as Danone (Spain), Nestle (Switzerland), and Yakult (Japan) accounted for more than 70% of all yogurt and sour milk products sales for the year. The rising popularity of Greek yogurt in Brazil has enticed a number of local competitors to launch their own Greek yogurt products, as major local brands Vigor, Batavo, and Piracanjuba have all launched Greek yogurt products in Brazil.34 Buyer power in the industry is evaluated as moderate. Although buyers are high in number and they have many options to choose from when deciding which yogurt brands to purchase, their power is limited. As purchasing power has increased in the country, powerful yogurt manufacturers have focused on producing more expensive premium products, which has initiated switching costs in the industry, due to increased levels of differentiation between brands.35 Buyer power is also limited due to the low number of substitute products available. Substitute products in the Brazil yogurt industry include ice cream, and dessert-style frozen yogurt. Ice cream sales in particular have been strong in Brazil, due to strong promotion for new premium products such as Haagen-Dazs 33 "Chobani." Chobani. Chobani LLC, 2015. Web. "Yogurt and Sour Milk Products in Brazil." Euromonitor International. N.p., n.d. Web. 6 Jan. 2015. 35 "Yogurt and Sour Milk Products in Brazil." Euromonitor International. N.p., n.d. Web. 6 Jan. 2015. 34 14 Gelator, and Digiorno Italian Favorites, and growth is expected to continue over the next three years. However, yogurt consumers in Brazil are becoming increasingly attracted to the health benefits provided from products such as Greek-yogurt, and ice cream does not provide them with a healthy alternative option.36 The threat of substitute products in the yogurt industry is therefore low due to a lack of healthy substitutes for consumers. Supplier power in the industry has proven to be moderately high as the rising prices of raw milk and commodities such as sugar have impacted the price of yogurt in Brazil.37 However, supplier power is slightly reduced due to the fact that yogurt producers have numerous options of dairy suppliers to choose to receive milk from. Due to several federal and state programs designed to increase milk productivity and quality in Brazil, the number of dairy producing companies in the country has skyrocketed, reaching 11,000 entities in 2012.38 Lastly, the threat of potential entrants in the Brazil Yogurt industry is moderate. Although new entrants may be enticed by the growing economy and easy access to dairy suppliers, two significant barriers to entry exist. The first entry barrier entrants must overcome is the established brand equity of powerful international firms who currently dominate the market. The second barrier to entry is the product differentiation that is required to appeal to customers, whose increased purchase power has increased the demand for premium products. Country Analysis: Social-Cultural Outlook Standing as the 5th largest country in the world, Brazil’s population of 200 million people poses as a large potential market for Chobani product offerings. A high level of diversity 36 "Yogurt and Sour Milk Products in Brazil." Euromonitor International. N.p., n.d. Web. 6 Jan. 2015. "Dairy Industry in Brazil." Euromonitor International. N.p., n.d. Web. Jan. 2015. 38 "Dairy Industry in Brazil." Euromonitor International. N.p., n.d. Web. Jan. 2015. 37 15 characterizes the Brazilian population with 47.7% of its people identifying as white, 43.1% identifying as mixed-race, and 7.6% identifying as black.39 Brazil’s history is full of mass settlement movements within its territory by many different European groups. The descendants of Portuguese, Italian, Spanish, German, and Dutch settlers and/or immigrants comprise Brazil’s majority “white” population. The mixed-race Brazilian demographic group, known as the “Pardos”, is comprised of descendants of multiracial families with white, Amerindian, and black origins. Race is an important factor in Brazilian society in terms of social equality. Due to Brazil’s colonial legacy and history of slavery, inequality within Brazilian society is high and adversely affects mixed and black ethnicities.40 The age distribution of Brazilians is characterized by a diminishing proportion of children in the entire population due to declining birth rates. According to 2015 Euromonitor research, Brazil’s age segments rank accordingly: 47,040,000 Middle Age (30-44) 40,093,000 Young Adults (18-29) 34,699,000 Mid-Lifers (45-59) 24,179,000 Later-Lifers (60+) 17,721,000 Kids (3-8) 17,453,000 Teens (13-17) 13,388,000 Tweens (9-12) 9,084,000 Babies (0-2) The population in Brazil is slightly more female than male by about 3.5 million women. Historically, gender inequality within Brazilian society has presented itself as a pressing social issue. It has been found in many cases that women earn around 75% of their male counterpart’s earnings while working in the same occupation with the same number of years experience.41 Inequalities in income, education, and treatment still are of pressing national focus, but are 39 40 41 "Brazil." The World Factbook. Central Intelligence Agency, n.d. Web. 11 Feb. 2015. "Affirming a Divide." The Economist. The Economist Newspaper, 28 Jan. 2012. Web. 01 Mar. 2015. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. 16 showing signs of improvement with more women becoming educated, participating in the workforce, and even stepping into the family’s role as the leading income provider. Also, the 2010 election of Brazil’s first female president, Dilma Vana Rousseff was another great step forward for Brazilian gender equality. The typical Brazilian family has experienced significant downsizing over the past 50 years directly correlating with fertility rate. Averaging 6 children per woman 50 years ago, today’s Brazilian family only averages 2 children per woman.42 Families sizing in three or four members make up 50% of Brazilian households. More than half of these households are couples with children, while only 11% are single parents with children. Families in rural areas tend to be larger in size than families residing in urban settings, but the number of families living in cityscapes around the country accounts for 87% of Brazilian households. The most common type of Brazilian homes is a detached house dwelling, making up 86% of all households. The next common is apartment style living, which amounts to 12% of Brazilian housing.43 In terms of housing appliances and technology, Brazilian households typically have only the necessities. For example 97.9% own a refrigerator, 84% own a mobile phone, and 98% own a TV, but only 55% have an internet enabled computer, 57% have a washing machine, and only 40% have a microwave oven.44 The Brazilian diet consists of foods found naturally on the South American peninsula as well as foods and ingredients imported by its inhabitants throughout history. Typical meals vary by region, but staple foods include:45 ● ● 42 43 44 45 Tropical Fruits Root Vegetables "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. 17 ● ● ● ● Rice & Beans Meat (Beef, Pork, Chicken) Seafood & Fish Coffee In Brazil, lunch is treated as the most important meal of the day and is therefore the largest. Employees usually take up to two hours for lunch breaks during the workweek, and accordingly, many restaurants are only open during lunch periods. Brazilians will either return home for lunch or commonly eat out at buffet style restaurants. Breakfast is typically a small combination of fruit, yogurt, small sandwiches and/or bread eaten at home. Dinner similarly is eaten at home and is a small homemade meal or take-away food like pizza. Fast food restaurants have become very popular and are viewed as leisurely gathering places for friends. The American chains are the most popular and are typically crowded on weekends. One of the biggest trends, however, has been the growth of convenience-packaged foods. Between 2002 and 2007, the demand for chilled processed foods increased by 188%, and has experience sustainable growth since.46 The packaged dairy food sector stands as the second largest packaged food sector only after packaged bakery products. The shifting focus is beginning to target the demand for healthy alternatives and small packages in order to avoid alienating low-income customers. As of recent, there has been a growth in national attention to adopting healthier lifestyle, especially eating habits. Chiefly driven by a growing obesity problem, Brazilians are beginning to realize the harm in consuming the highly processed foods and soft drinks that have flooded the market in the past couple decades. Currently, one in every three Brazilians is overweight, and 18% of the population is considered obese. In 2000, only 8% of the population was obese.47 Even more troubling to Brazilians is the epidemic of childhood obesity because over the past two 46 47 "Brazil - Growth Market for the Future." Passport. Euromonitor International, Feb. 2008. Web. 2 Mar. 2015. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. 18 decades, children from ages 4-9 have experienced a 12% increase, and over the past four decades, teenage obesity has grown by 18%. Brazilians are now primarily focusing on eating unprocessed or minimally processed foods and ingredients. Economic Outlook The Brazilian economy ranks as the 7th wealthiest in the world with a GDP of 2.3 trillion US dollars as of 2013.48 The Brazilian currency, known as Brazilian Real (R$), has a conversion rate of 2.84 to 1 against the U.S. dollar.49 The most significant recent economic trend in Brazil has been its emerging middle class. Due to relative political and economic stability, middle class Brazilians have been able to increase their income and economic futures. Disposable income has been on the rise as it stood around R$12,607 in 2008, and is expected to reach upwards of R$16,789 in 2015.50 Brazil’s unemployment rate, currently 5.9%, has been steadily declining since 2009 when it amounted to 8.3%.51 The top three industries that are keeping Brazilians employed include agriculture, wholesale & retail trade, and food & beverage manufacturing. In fact, it is estimated by the Brazilian government that 30% of the economy is directly and indirectly related to the food and beverage industry.52 Specifically, the dairy industry within Brazil is substantial as it ranks within the top 5 milk producing countries in the world, and it is home to the third largest dairy herd in the world.53 Consumers in the Brazilian economy purchase their food products primarily from three forms of grocery markets. Independent, small grocery markets, supermarkets, and then 48 49 50 51 52 "GDP Rank." GDP (current US$). The World Bank, 2014. Web. 01 Mar. 2015. http://www.bloomberg.com/quote/USDBRL:CUR "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. "Total Unemployment." World Bank Data. The World Bank, 2014. Web. 24 Feb. 2015. "Sectoral Profile - Brazil." Sectoral Country Profiles. International Labour Organization, 1 Feb. 2012. Web. 2 Mar. 2015. 53 "DairyCo Market Information." World Milk Production. Agriculture & Horticulture Development Board, 24 Feb. 2014. Web. 02 Mar. 2015 19 hypermarkets. Due to the Brazilian climate, fresh produce products are available year round and are supplied to markets directly from farmers. Supermarkets and hypermarkets are a growing trend, because it allows Brazilians, who typically shop after work, to complete all desired purchases in one trip to the store. The shopping and spending habits of Brazilians have significantly been influenced by the increased prevalence of credit and debit card use. As the infrastructure for electronic payment methods has been rapidly adopted by businesses, credit and debit card payments are becoming the preferred method used. In 2000, there were 36 million credit cards and 48 million debit cards in circulation. Today in Brazil, there are 278 million credit cards and 329 million debit cards in circulation, and business are even beginning to accept mobile payments from smartphones.54 The growth in credit payments demonstrates the tendency for Brazilians to save little of what they earn and pay for things in installments. The savings ratio in Brazil was only 5.3% in 2014.55 Due to this paycheck-to-paycheck attitude, Brazilians are known as highly impulsive shoppers. There is a current rise in the presence of shopping malls to meet the Brazilian shopping demand. Between 2013 and 2015, an estimated 157 shopping malls are to be constructed around the country. According to a survey study, 51% of Brazilians visited a shopping mall once a week in 2012.56 Political Outlook The current Brazilian government acts as a federative republic. Similar to the U.S. Government, it is comprised of an executive branch led by a president, a bicameral legislative branch, and a judiciary branch. The government is seen as a burdening factor to promoting new 54 55 56 "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. "Brazil Country Profile." Passport. Euromonitor International, 19 Dec. 2014. Web. 27 Feb. 2015. "Consumer Lifestyles in Brazil." Passport. Euromonitor International, 4 Mar. 2014. Web. 2 Feb. 27. 20 business for a couple reasons. First, Brazil’s government has issues with corruption within its legislative branch and especially its judicial branch. It is common for the many regulatory agencies to accept bribes to allow permission of business practices. According to Transparency International, 70% of Brazilian business owners and managers identify corruption as a private sector constraint.57 Due to practices like this, Brazil was ranked 69th out of 175 countries for corruption. Second, Brazil has a very complex and expensive tax code that also constrains businesses. The Brazilian tax rate amounts to 69% of profits for businesses. Overall, according to the World Bank, Brazil ranks 120th out of 189 countries in terms of ease of doing business.58 The government is on board for promoting healthy dietary habits. In 2014, the Ministry of Health of Brazil released the 2nd Edition of its Dietary Guidelines for the Brazilian Population. In this document the Brazilian government addresses the following topics: ● ● ● ● ● ● Five Principles for a Healthy Diet Choosing Foods From Foods to Meals Modes of Eating Understanding and Overcoming Obstacles 10 Steps to A Healthy Diet These guidelines enforce the value of eating strictly minimally processed foods, which is exactly what Chobani provides.59 57 "Corruption by Country." Transparency International Country Profiles. Transparency International, Dec. 2014. Web. 01 Mar. 2015. 58 "Doing Business in Brazil - World Bank Group." Doing Business in Brazil. The World Bank, 2014. Web. 02 Mar. 2015. 59 "Dietary Guidelines for the Brazilian Population: 2nd Edition." Ministry of Health of Brazil, 2014. Web. 23 Feb. 2015. 21 Country Attractiveness Screening: 0 to 10 (0 = No Alignment Exists 10 = Strong Alignment Exists) Social/Cultural Alignment . . . . . . . . (7) Economic Alignment . . . . . . . . . . . . (8) Political Alignment . . . . . . . . . . . . . (5) Overall, Brazil is an attractive country to consider for potential market entry by Chobani. We ranked its social/cultural alignment with Chobani products a 7 out of 10. We felt that given Brazil’s large, majority urban population, household demographics, appetite for tropical fruit, and increasing health awareness, that the Brazilian people would be in market to purchase Chobani products. Social factors that were not in alignment were slight but included the fact that yogurt is typically only consumed at breakfast, and that fewer children being born could mean a smaller future market that could limit sustainable growth. Brazil’s economic alignment was ranked an 8 out of 10. Positive factors included increasing disposable household income, an emergent middle class, high spending habits, large dairy sources, and the prevalence of supermarket retail outlets. Also, since 2.84 Brazil Real are gained with every dollar, Chobani as an American company would benefit from the currency exchange rate. Finally, Brazil’s political alignment scored a 5 out of 10. Besides the government’s promotion of minimally processed foods, it does not offer much benefit or ease of market entry. Political corruption and expensive taxes could make success difficult to achieve. Given that Brazil is overall attractive, it is necessary to explore the best mode of market entry. 22 Foreign Market Entry Assessment: In order to successfully enter the Brazilian market, it is important for Chobani to formulate a sufficient market entry plan. By basing the entry plan off of previous foreign market entry attempts, competitor entry history, and well-developed platform ideas, Chobani will be able to seamlessly and successfully enter into this new foreign market. The development of this market entry plan will be dependent on several factors that will be thoroughly examined throughout this analysis. These factors that will affect Chobani’s entry into the Brazilian market include the identification and specification of an incremental or full-scale entry plan, potential launch platforms and specific product introduction, and the formation of foreign market partner relationships. In order to formulate an adequate market entry plan, Chobani executives must determine whether the use of an incremental or full-scale market entry plan will be most beneficial. Following the exceptional success that Chobani had experienced in their own home market since the products introduction in 2007, sights had been set on entering foreign markets. In the November of 2011 Chobani entered both the Australian and Canadian markets. Chobani utilized an incremental market entry method upon entering the Australian market. A 2011 Food and Beverage Close-Up article detailing Chobani’s international distribution plans explains, “Landing on Australian shores, seven flavors - Peach, Blueberry, Strawberry, Vanilla, Mango, Passionfruit, and Pineapple - of Chobani are now available in Woolworths stores throughout New South Wales.” 60 By introducing only seven yogurt flavors in one specific chain of stores throughout Australia, Chobani was able to cautiously enter the market without fully immersing all of their resources. This introduction proved wildly successful and allowed for later product 60 "Chobani Launches International Distribution." Food and Beverage Close - Up (2011)ProQuest. Web. 23 Feb. 2015. 23 and market expansion in Australia. Similarly, Chobani also entered the Canadian market by employing an incremental entry method. The same Food and Beverage Close-Up article details, “In Canada, five flavors, including Black Cherry, Strawberry, Peach, Plain and Pomegranate are now available at a variety of Loblaw banner stores in the Greater Toronto Area and Hamilton” 61 . Because Canada’s markets differ geographically and demographically, Chobani implemented an incremental introduction of several flavors in only two areas. By implementing this entry plan so specifically, Chobani was able to use these areas as test markets for the products. Although sales in Canada were only successful for one year, Chobani was able to withdraw from the market due failure in securing a long-term dairy supply without incurring severe losses. Had Chobani introduced their products using a full-scale entry mode, many more losses would have been incurred. Historically, Chobani has seen great success when utilizing incremental entry methods upon entering foreign markets. If a full-scale market entry mode were to be used, it is possible that such success may not be achieved. If Chobani were to have entered into the Australian or Canadian markets initially by expending all resources and introducing all products to all markets, a greater risk would have been taken without confirmation of initial success. Because incremental introductions have already proven to be successful, Chobani should maintain incremental methods upon entering the Brazilian market. It will be crucial to identify the best areas of market potential and define which products to introduce when entering this foreign market. Identification of social and cultural preferences within the Brazilian market will allow Chobani to decide which products and/or flavors to introduce initially. By examining food preferences of 61 "Chobani Launches International Distribution." Food and Beverage Close - Up (2011)ProQuest. Web. 23 Feb. 2015. 24 the Brazilian people, Chobani will be able to tailor the flavors and products that are introduced to target and meet the likings of the Brazilian market. For example, Brazilians eat a large amount of tropical fruit including mango, guava, passionfruit, and pineapple62. By introducing flavors that coincide with these preferences of the Brazilian consumers, Chobani will see more success than if they were to introduce flavors typical to the home, US, market. It has been cited that a popular fruit called acai also contains many health benefits and is popular in Brazil for both its benefits and its flavor. No probiotic yogurt mixed with the acai fruit has been created thus far. This may be a potential mode of entry for Chobani to breach the Brazilian market and quickly gain market share. Another way to gain a better understanding of these consumer preferences is by observing the successes and failures of other competitors already present in the Brazilian market. The top provider of yogurt in Brazil currently is Danone. A Euromonitor International Ltd article outlines the success of competitor, Danone, “Danone remains the sales leader in yoghurt in 2012, presenting a value share of 38% in 2012. The company's great performance is mainly driven by the success of its Activia brand… The launch of Greek yoghurt also helped Danone to increase sales, regarding the fact that Greek yoghurt is gaining popularity among consumers”63. This article outlines the successes that Danone has experienced in the Brazilian market with specific products that have been introduced. By introducing similar products, Chobani will be able to compete against companies such as Danone and other competitors in the market. The 62 "Typical Brazilian Food." Southamerica.cl. N.p., 11 June 2014. Web. 23 Feb. 2015. 63 YOGHURT AND SOUR MILK PRODUCTS IN BRAZIL. London: Euromonitor International Ltd, 2014. ProQuest. Web. 23 Feb. 2015. 25 introduction of these products will require effective partnerships and launch platform development. In order to effectively enter the Brazilian market it will be important for Chobani to develop strong partnerships and, with those partners, an effective launch platform. Among Chobani’s current partnerships in the United States are the IMG Colleges and the United States Olympic Committee. Through their IMG Colleges partnership Chobani has been able to have a presence in the athletic market, supporting and fueling college athletes and fans while increasing brand awareness. Through their United States Olympic Committee partnership, Chobani has developed a presence in the athletic and fitness industry markets, again, promoting brand awareness among target consumers.64 In the year 2016 Brazil will host the Olympic and Paralympic games. By maintaining a partnership with the United States Olympic Committee, Chobani could use the 2016 Olympics as a product launch platform. This platform has the potential to launch the Chobani brand directly into the target market of health and fitness foods. Historically, Chobani has seen success with this partnership in the United States, so maintaining this partnership and carrying it to the foreign market could prove beneficial as a launch platform for the brand. Market Segmentation Since the Brazilian population is very diverse, there are thousands of ways a marketer could segment the Brazilian market for Greek yogurt. We decided to segment the market based on geographic area, age, household type, household income bracket, and finally psychographic profiles which we feel describe various lifestyles and attitudes that characterize major parts of 64 "Chobani; Chobani Partners with IMG to Reach New Greek Yogurt Fans." Marketing Weekly News (2014): 117. ProQuest. Web. 23 Feb. 2015. 26 the Brazilian population. We strongly feel that these segmentation criteria will effectively divide the market in homogenous segments, and will therefore provide a framework for accurate targeting. In order to fully understand the Brazilian market that Chobani faces, we must first deep dive into these criteria and how they divide the market. The overall Brazilian population consists of 203,675,000 people. The first step in the segmentation of this population was to look at geographic area. This clearly divided the total market into two parts, those who live in urban communities and those who live in rural areas. Next, we created divisions based on age ranges. The age segments we chose were less than 18 years old, 18 to 29 years old, 30 to 39 years old, 40 to 55 years old, and then 55 years and older. We used these age segmentations because we felt that each captures a different stage of life. Youths and adolescents are captured in the first, combining all those who are typically dependent on parents or a guardian. Young adults are captured in the second, representing all of those starting to make their way on their own. The third age bracket, captures adults who should be beginning to establish themselves and their families. The fourth consists of ages which would be considered middle age adults. Finally the fifth age bracket groups together those who are at the age of having raised kids and beginning to look at retirement. At this point, there are ten homogenous groups. From each one of these ten, they are each broken down into four categories based on household type. Single person homes, couples with children, couples without children, and single parent homes are all considered. Given this further division of each of the ten geographic/age market segments, we now arrive to a total of 40 homogenous segment groups. After household type, we divided each of the 40 segments by the five economic classes of the Brazilian population. Class A, B,C, D, and E all represent the different monthly household income levels. This furthers the segmentation of the Brazilian market into 200 homogenous 27 segment groups. For the final division of the market, we divided each of the 200 homogenous segment groups into three psychographic profiles related to the age bracket they stem from. A couple examples of are: The Nocturnal Socialite: • • • • • • 18 - 29 years old Not married, No children Possibly an apartment renter with siblings Lives for the beach, urban nightlife, and experiences Heavy social media user Who is sharing a meal with them is more important than what the food is The Health Monitor • • • • • • 55 + years old Married, with children and grandchildren Suffers from health ailments or obesity Not active Is highly concerned with diet to combat ailments Family members purchase foods on request Targeting In total, by the end of our market segmentation, we arrived at a segment amount of 600 different groups within the Brazilian market. Of the 600 segments we divided the total market into, we decided in our go-to-market strategy to target 18 of them. First, we decided to target Brazilians who live in urban environments and cities. The rationale behind this decision was simply that these Brazilians make up a staggering majority of the population. By targeting urban areas, we will not only reach a large consumer base in the population, we will also have the opportunity to sell our products in more stores and locations due to higher concentration in the cities. 28 Next, we decided to target Brazilians who fall between the ages of 18 - 40 years old. This age range incorporates those who typically spend and shop independently because of their disposable income. Young teens and children under 18 rely on their parents to shop. The next decision was to target family households. Households consisting of couples with children, couples without children, and single parent households we believe will be the greatest potential buyers since purchasing decisions typically factor in the whole family and are larger in amount. After household type, we decided to target a specific group of economic classes. We chose to target only households that earn a monthly income of R$ 1734 or higher. This incorporates any household of middle class status or higher. We chose to do so because Chobani offers a premium product, and will lead the market in health value (see positioning). Realistically, consumers of this income demographic range will be most likely to purchase our products due to their high amount of disposable income. Lastly, after we selected our targeting criteria for household income, we decided to target two specific psychographic profiles, one from the 18 to 29 year old range, and the other from our 30-40 year old range. For the younger part of our target market, we believe it wise to target those we refer to as “The Athletic Achievers”. These individuals are highly goal oriented, achievement driven, health conscious, athletically active, and family oriented people. They tend to be younger, single, and living with their parents because they are still able to be competitive in sports. We believe that Chobani Greek yogurt will resonate with such individuals because it is healthy, provides a great food choice to keep someone satisfied and sharp throughout the day, and the premium brand culture relates to their mindset. The second demographic group is “The Maturing Adults”. These people are young adults approaching middle adulthood, who have 29 established a successful career path, started a family of their own, and are interested in the safety and health of that family. We believe that these success driven, family households will also be a strong candidate for Chobani consumer because they want to raise healthy kids, take care of themselves, and they have the money to do so. Urban 18-29 Urban 30-40 Family Households Family Households R$ 1734 + R$ 1734 + Athletic Achievers Maturing Adults At this point, the question now becomes, “What market potential does this target provide?” In order to answer this question, we first ran calculations to estimate the target market size. First, we took the total urban population of 173,960,000 Brazilians and multiplied it by the percentage of the population that falls in the age range of 18 to 40 years old, which is 42.8%. This narrowed our market to 74,454,880 Brazilians. From there, we used the percentage breakdown of household types in the total population to estimate the proportion of how many Brazilians live in each household type within our age range. Homes made up of couples with children, couples without children, and single parent account for 69.2% of the population, so holding that this proportion is true amongst 18 to 40 year olds, our next target market figure was narrowed even further to 51,522,776 Brazilians. Next, taking the 75% proportion of families with monthly household incomes of middle class status or higher, we come to a figure of 38,643,082 Brazilians. Finally, factoring our psychographic profiles, we arrive to a final target market size of 15,457,232 Brazilians, around 8% of the total population. Having a target market size of 15.4 million people leads us to believe that this is a very lucrative market entry endeavor. 30 Positioning Competitor Analysis In order to ensure that Chobani positions their products in a manner most advantageous relative to target market consumer preferences and competitors offerings in the Brazilian yogurt industry, a brief analysis of Chobani’s key Brazilian competitor’s marketing strategies and product offerings must be performed. By analyzing the strategies and product offerings of the four leading competitors in Brazil’s Greek Yogurt industry; Dannon, Nestle, Vigor, and Batavo, Chobani can better formulate a positioning strategy that will differentiate themselves in the minds of their Brazilian target market and ultimately form a foundation for how they will execute their marketing mix for this demographic. The first key competitor in the Brazilian Greek yogurt industry to be analyzed is Danone SA (Dannon). Dannon is a multinational food company based out of Paris, France. They initially entered the Brazilian marketplace in the 1970s, and they are currently the market share leader in the Brazilian yogurt industry with a 14 percent share. Dannon currently has a number of traditional yogurt product lines available in Brazil, as well as their popular Activia Greek yogurt line. Dannon’s Activia Greek yogurt line offers Brazilian consumers five basic flavor options, these being vanilla, blueberry, cherry, peach, and strawberry, as well as a light version offering 40 calories fewer per cup than their standard Greek yogurt. Possessing the highest price point in the Brazilian Greek yogurt market at R$2.49 per cup, Dannon positions their products as a “feel good” Greek yogurt, one that provides consumers with exceptional taste as well as two times more protein and less fat than traditional-style yogurt. From a nutritional standpoint, Dannon’s Greek yogurt contains 7 grams of protein, 140 calories, 0 grams of fat, and 0 grams of saturated fat per 5.3 ounce cup. As an international brand leader, Danon possesses strong marketing 31 abilities which have translated well into the Brazilian market. The company regularly invests heavily into television advertising campaigns to promote their Activia brand. In 2014, the company began a series of television advertisements featuring a company created cartoon character named Familton, to promote Dannon’s Activia Greek yogurt, which quickly became popular among Brazilian consumers. In the summer 2014, Dannon collaborated with Colombian pop-superstar Shakira in order to promote their Activia brand, releasing a four-minute music video titled “LaLaLa (Brazil 2014)”. The video was a hit worldwide, eventually becoming the most shared video-advertisement of all time with nearly 6 million views by July 2014. The second key competitor in Brazil’s Greek yogurt industry to be analyzed is Nestlé SA (Nestle). Headquartered in Switzerland, Nestle is currently the largest food company in the world, and a major player in Brazil’s dairy market, possessing the third highest brand share in the country’s yogurt and sour milk products category at 7.16%. Nestlé’s success in Brazil’s yogurt industry is mostly attributed to the popularity of their traditional style yogurt brands Aticol and Molico, which are positioned as probiotic dairy products aiding in heart, bone, joint, and digestive health. In 2013, the company hoped to build upon the success of their traditional style yogurt products in Brazil by releasing a line of Greek yogurt in three flavors; plain, strawberry, and peach. Marked at a moderately high price point relative to other competitors in Brazil’s Greek yogurt industry, Nestle positions their Greek yogurt as a “indulgent but healthy” Greek yogurt, one that offers great taste was well as an excellent source of protein and calcium. Analyzing the nutritional content of Nestle’s Greek yogurt line, their products offer consumers 4.7 grams of protein, 4.2 grams of fat, 135 calories, and 1.3 grams of saturated fat per 5.3 ounce cup. Nestle has maintained a strong marketing presence in Brazil dating back to when the company introduced their popular Nescafe brand into the country in the 1940s, and have taken 32 advantage of a joint venture with popular Brazilian dairy company Fonterra in order to enhance marketing efforts for their yogurt products. This move has proved successful in that the company has run several television campaigns over the past decade, which has helped fuel sales of their dairy and yogurt products in Brazil. The third key competitor in the Brazilian Greek yogurt industry to be analyzed is Vigor Alimentos (Vigor), the largest dairy company in Brazil. Vigor was the first company to launch a Greek yogurt product in Brazil, with the introduction of their Greek Force line in 2012. The Greek Force line currently consists of three product lines; Greek Force Zero, Traditional Greek Yogurt, and Greek Force Kids. Priced at a moderate price point relative to other leading competitors in the industry, Vigor positions their Greek yogurt products as being highly differentiated relative to competitors due to its high nutritional value, particularly with regards to protein content, which they advertise as being much higher than traditional yogurt. The company’s Greek Yogurt Zero product line possesses the most optimal nutritional profile of their three Greek yogurt lines, offering zero grams of fat, 5.6 grams of protein, and 151 calories per 5.3 ounce cup. In order to promote the launch of their Greek Force Zero and Greek Force Kids product lines, Vigor spent close to $7 million in their summer 2013 advertising campaign. The company also values the input and opinions from their Brazilian customer base, as Vigor CEO Gilberto Xando announced that numerous flavor varieties debuting in 2013 were launched after fielding over 5,000 requests sent to the company’s customer service department. The fourth key competitor in the Brazilian Greek yogurt industry to be analyzed is the Brazilian food company Batavo SA (Batavo). Batavo is owned by BRF, a Brazilian brand leader whose food products are present in 95% of all Brazilian homes. Batavo’s product offerings consist of five traditional style yogurt product lines, and one Greek yogurt product line launched 33 in 2013. Batavo’s Greek yogurt line offers four basic flavors for Brazilian consumers, these being vanilla, mango, strawberry, and original. With the second highest price point in Brazil’s Greek yogurt industry at R$ 2.39 per cup, Batavo positions their Greek yogurt line as an all natural Greek yogurt that provides significant health benefits relative to competitors. Similar to Vigor, Batavo strongly emphasizes the protein content of their product as a differentiating factor when positioning and advertising their Greek yogurt line. This is evident in the packaging of all their Greek yogurt products, on which “2x More Protein” is displayed in large, bold-faced lettering. Batavo's Greek yogurt products possess 7.5 grams of protein per 5.3 ounce cup, currently the highest mark among all competitors in Brazil’s Greek yogurt industry, as well as 2.5 grams of fat and 111 calories per cup. In order to promote the launch of their Greek yogurt line in 2013, Batavo invested an undisclosed amount in a television and Internet campaign starring popular Brazilian comedian Gregorio Duvivier, which aired throughout the summer of 2013. The company also makes extensive use of Social Media platforms Twitter and Facebook to advertise and promote their products, as well as YouTube, which the company currently uses to air their “Inspired by Nature” advertisement campaign, aimed to promote their traditional yogurt product lines. Outside of Dannon, Nestle, Vigor, and Batavo, Brazil’s Greek yogurt industry is comprised of the prominent but less established local Brazilian brands Taeq and Atti Latte. Both brands are positioned as low price, low nutritional value offerings relative to competitors, both possessing a nutritional profile that is much less appealing than the industry leaders. Taeq, the higher priced option of the two at R$ 1.80 per cup 5.3 ounce cup, contains 5.7 grams of protein, 5.6 grams of fat, and 190 calories per cup. Atti Late, priced at an industry low R$1.39 per cup, offers 5.4 grams of protein, 5.4 grams of fat, and 190 calories per cup. While Dannon, Nestle, 34 Vigor, and Batavo all offer less than 1.5 grams of saturated fat per cup, both Taeq and Atti Latte’s Greek yogurt products possess close to 3.5 grams per cup. Comparing Chobani’s Offerings with Brazilian Competitors In order to better formulate a positioning strategy that differentiates Chobani from competitors in Brazil’s Greek yogurt industry, a comparison of Chobani’s product offerings with current industry competitors is necessary. Due to the fact that rapidly increasing Greek yogurt sales in Brazil have been fueled by a health and wellness trend among Brazilian consumers, and taking into account current competitors decisions to advertise and position their Greek yogurt products based on beneficial health claims, especially with regards to protein content, comparison of product lines is best determined on an evaluation of nutritional value. Chobani’s traditional “Fruit on the Bottom” Greek yogurt line contains 130 calories per 5.3-ounce cup, a value that is on par with leading competitor’s offerings. The absence of fat as well as saturated fat in Chobani’s yogurt is a quality that only Dannon possesses in the Brazilian market. A substantial differentiating quality that Chobani’s Greek yogurt possesses relative to all Brazilian Greek yogurt competitors is its protein content of 12 grams per cup. This value is twice as high as the industry average, and 4.5 grams more per cup than Batavo, whose Greek yogurt line currently boasts the highest protein content in the Brazilian market. Given these qualities and Chobani’s use of all natural ingredients, real fruits, and probiotics, Chobani’s Greek yogurt contains a nutritional profile that is superior relative to current competitors in Brazil’s Greek yogurt industry. Chobani’s Positioning for Brazil For Chobani to best differentiate themselves in the minds of their Brazilian target market relative to competitors and consumer preferences, Chobani will position their product line as an 35 all-natural and nutritious Greek yogurt of premium quality. This positioning message will seek to engrave the image of Chobani in the minds of their target market as producers of a high quality Greek yogurt with a nutritional profile that is unrivaled in Brazil’s Greek yogurt market. Positioning Chobani as a producer of nutritious, premium quality Greek yogurt will allow Chobani to be perceived in the most favorable way relative to competitors and consumer preferences because it appeals to Brazilian consumer’s desire for value-added products that are beneficial for their health, while also differentiating Chobani from current competitors in terms of nutritional value, a quality that has been the focus of current competitors’ positioning in Brazil’s Greek yogurt industry. Ultimately, this positioning strategy will serve as a guideline and the foundation for how Chobani will execute their marketing mix for their Brazilian demographic. Product In order to seamlessly and most effectively enter the Brazilian market, we will be offering a standardized Chobani product line. By offering the standard Greek yogurt that has been so well received in the existing markets of the United States and Australia, we will hopefully be able to experience similar success within the Brazilian market. This incremental entry method will allow us to enter into the country with our core product without subjecting ourselves to too much risk by utilizing a full-scale entry mode strategy. We will be introducing this product line of the standard fruit on the bottom Greek yogurt, but with flavors that are comparable and consistent with the Brazilian preferences. Brazilians are well known for their desire to consume fruity, tropical flavors due to their global location and ease of access to these tropical fruits and exotic flavors. With that in mind, we have decided to introduce the already existing Chobani flavors of pineapple, mango, and passion fruit. We will also be introducing two 36 brand new flavors that will appeal heavily to the Brazilian target market. These flavors will include guava and acai berry. Currently in the United States and Australia Chobani is sold in individual, single serving 6 oz cups or in the larger 32 oz bulk containers. Although these serving sizes have performed well within the existing countries, the existing yogurt products within the Brazilian supermarkets are packaged in sets of four or six. We will continue to offer the 32 oz and 6 oz serving sizes, but we will also introduce new packaging of six 6 oz cups attached and sold as a pack. This change in packaging will allow for our product to maintain a consistent packaging and pricing position in comparison to the existing competitors. It will also increase sales due to the increased amount of actual cups being sold. In order to efficiently produce this product line without having to worry about risks associated with exporting, we will be partnering with a dairy production and distribution facility within Brazil. Brazil is one of the world’s top dairy markets. This benefit will allow us to capitalize on production and facilitate product introduction and distribution. By avoiding exporting processes, we will not need to address the issue of costly refrigerated shipping or language/ cultural barriers in terms of nutritional facts and/or product information. By maintaining a consistent and healthy partnership with a Brazilian production and distribution facility, we will be able to overcome any cultural barriers due to affluent native Brazilian employees and processes. This partnership will also allow us to avoid the cost of hiring and training brand new employees. We will be able to utilize the existing employees within the production and distribution facilities who are already trained in the standard processes that will be used. Because Chobani Greek yogurt is a specialty product, some specialty production processes will be required. In order to properly train the existing employees, representatives who are versed in these processes will be flown to the production facilities to explain the process and train the employees as necessary. 37 We will be introducing this product line through use of a family branding strategy. Initially, as mentioned previously, we will be introducing just one product line. Based on the performance of this product line within the market, we will be able to formulate the decision as to whether we should pull out from the market, or continue introducing other lines. If performance measures lead us to believe that we should continue to introduce more product lines, this family branding strategy approach will prove to be very beneficial. Because the existing customers within the market will already be familiar with the Chobani name and will hopefully associate a positive recognition with the brand, it will be easy to introduce additional products under the same positive brand name. In addition to utilizing this family branding strategy, we will align the introduction of each new product line with the existing standardized Chobani brand image of premium, high quality, and health conscious yogurt. By maintaining this consistent image we will hope to acquire and retain a loyal and passionate customer base. Pricing Upon entering Brazil’s Greek yogurt industry, Chobani will utilize a standardized price model. By using a standardized price that is similar to their pricing models in the U.S. and Australian marketplaces, Chobani will charge a slightly higher premium price for their Greek yogurt products as a reflection of their high quality product offerings. The specific pricing strategy Chobani will employ in Brazil’s Greek yogurt market is a price skimming approach. Using this approach, Chobani will enter the Brazilian market at a price point higher than current leading competitors, which over time will be gradually reduced until becoming fixed at a point where Chobani’s products are priced competitively with leading premium competitor’s offerings. The decision for Chobani to utilize a price skimming strategy was supported by several global pricing factors, which include market conditions, competition, company goals, and company 38 costs. In terms of market conditions, the use of a price skimming strategy is justified by the increased purchasing power of Brazilian consumers, as well as the increased demand for healthy products in Brazil’s Greek yogurt industry. Brazilian consumers perceive healthy products as value-added, and due to increased purchasing power they are willing to pay a premium price for the benefit of health and wellness. From a competition standpoint, the size of the price premium placed on Chobani’s Greek yogurt is directly related to their strength of product in terms of nutritional value relative to competitors in the industry. Employing a price skimming strategy will also satisfy a number of company goals Chobani will seek to address upon entering the Brazilian marketplace. First, entering the market at a premium price point will assist Chobani in achieving their goal to build market share in a relatively new and growing competitive market. Second, a premium price point will help the company reinforce the perception of Chobani as a Greek yogurt that is superior relative to competitor’s offerings. Reinforcing this perception will also allow Chobani to achieve their third goal, to incite initial purchases of their Greek yogurt by introducing a new premium brand into the Brazilian marketplace. The final factor used to determine and justify the optimal pricing strategy for Chobani to utilize in entering Brazil’s Greek yogurt market is company costs. By using a price skimming strategy and entering the marketplace at a premium price point, Chobani will be able to cover several unavoidable costs that will be incurred in the process. Substantial costs for Chobani in entering the Brazilian marketplace include a number of startup costs associated with entering a new foreign market, such as distribution costs, promotional costs, and manufacturing costs. Chobani must also cover the necessary costs of high quality ingredients that go into the production of their premium quality products. 39 Distribution / Place The overall distribution strategy for getting our products in the hands of our customers will follow a standardized model. The unique part about this opportunity to enter the Brazilian market is that all of our ingredient sourcing, production, and sales will be done within the country. First, we analyzed Brazil and what it offers agriculturally in terms of what we can get from the local market. Brazil boasts one of the largest dairy supplies in the World. Located in the southern regions of Brazil, this dairy source will not only provide the backbone ingredient to our products, but a fresh, local ingredient source too. Since we will be introducing a product line consisting of our Fruit on the Bottom cups, we also needed to find fruit sources. Because of Brazil’s tropical climate, this was no difficulty. Tropical fruits grow in abundance in the southern and southeast regions of Brazil. Also, the local favorite acai berry grows in the Northwest region of Amazonas, so we will be able to source it from there. After choosing our sources, we next need to find a domestic production facility with whom we will make a partnership agreement. At this point, we do not wish to invest in building our own facility. Since our sources are located in different regions around Brazil, and we need to ship the final products to stores in the urban areas around Brazil, we decided to partner with a production facility in Goiania, Brazil. This major city is characterized by its agricultural base economy, central location, and proximity to the capital of Brazil. It is also situated with access to major highways and railroad lines for shipping purposes. The final process of our distribution channel strategy is the selection of the storefronts from which we will offer our product line to customers. Our research has indicated that supermarkets and even hypermarkets are on the rise in Brazil; therefore we plan to sell our 40 products in these points of sale. We will begin by offering Chobani products in the top three chains in Brazil: Qualita, Carrefour, and Wal-Mart Brasil. Promotion Entering a new market requires immense detail to all aspects of the marketing mix. One area in particular that can result in the success or failure of your entry strategy is promotion. Not only is it important to understand where and how you plan to promote, but with whom to do it. All of this can only be accomplished after first segmenting the market and developing a proper targeting and positioning strategy. From there research must be conducted to understand which outlets of promotion are necessary and what components of the integrated marketing communications will be utilized to properly express your new brand and boost sales and brand awareness. After segmentation research, we have discovered that Chobani has the luxury of entering a prosperous market in Brazil that has the potential of almost 50 million consumers. Our target demographic of that near 50 million is between the ages of 18-45. This age range and psychographic profile of consumers boosts well for Chobani using television, newspapers, magazines and social media. In particular, Television will be a main source of promotion. It is “present in 95% of the households”(Brazilian’s Media Habits, 2015) in Brazil. To break it down further, the most popular form of television is broadcast, which is utilized by 83 percent of the population in comparison to only 10 percent who watch paid television (Brazilian’s Media Habits, 2015). Therefore we will focus our promotional efforts toward broadcast television in order to reach a much larger and more diverse consumer base. As far as using newspapers and magazines, this will only be utilized in certain regions of Brazil, rather than the country as a whole. Our primary target region for newspaper and magazine ads 41 will be in southern Brazil, more specifically in large cities located in the south. Literacy rates are highest and the “highest percentage of of readers are concentrated in the south part of Brazil.”(Brazilian’s Media Habits, 2015) Both newspapers and magazines will be used because together as a whole they accomplish reaching our entire demographic market. Between both of these primary outlets of promotion we will heavily tie in the use of social media. Brazil is now the largest user in the world in terms of social media (The Guardian, 2014). Facebook and Youtube have the highest percentage of users. Facebook is the number two country in the world in number of users (The Guardian, 2014). Given the incredibly high numbers related to both social media platforms our goal will be to leverage various hashtags for both and update both with the path that our Chobani CHOmobile is traveling across Brazil, very similar to how we do in our United States market. In 2016 Brazil will be host to the world’s largest stage as they host the 2016 Rio Olympics. This large culmination of people from across the world and more importantly the collective watching and excitement of the nation of Brazil as a whole is going to be our beginning form of entry. Our advertisements will begin with a consistent approach to those in the United States market where we show the Chobani yogurt cup as the primary focus. It will have connections to the Rio Olympics so that citizens get excited for both the Olympics and Chobani to come to Brazil. Additional sequential print advertisements will feature local Brazilian athletes that will be competing in the Olympics. This will create further buzz for our brand and it will be represented by members of our target market, people that are fit or trying to be more healthy. Following the Olympics, we will maintain our focus on using athletes for advertisements but will broaden our reach to the very popular Soap Operas of Brazil. An Outsider looking in thinks Brazil is known for their soccer, but in reality, citizens of Brazil admire their Soap Operas more. After 9.00 P.M 42 no more soccer can be played because Soap Operas are scheduled for that time slot (The Guardian, 2014). These soap operas are watched by nearly 50 percent of the entire population daily. Soap Opera stars are also widely used for advertisements and have the bodies that many seek out. Thus, we will utilize advertisements with Soap opera celebrities as well. Our promotional entry plan will be bold and radical. Given the time frame to enter with the Olympics in 2016 it would be difficult to implement an incremental promotional method. In recent years there has been a drastic increase in the profitability of companies that use advertising agencies to increase sales. Since 2009 the relation between using an ad agency and sales has gone from 750 million to 2.7 billion reias in 2013 (Statista, 2014). The correlation between advertising heavily and increased sales, plus the importance and pride of advertising by Brazilian culture is why we are choosing to partner with a Brazilian ad agency. In the United States Chobani currently uses Droga5 and also does most marketing in house for all creative advertisements (Advertising Age, 2015). We plan to maintain the consistent message they have developed with their promotional efforts in the United States, but given how large the Brazilian market is and the large scale potential profits we can achieve, it is ever so important that we leave no potential mistakes to cultural or language differences. We are targeting the ad agency Young & Rubicam. Young & Rubicam is the Brazil market leader in terms of ad spending (Statista, 2014). Spending more than twice its next closest competitor. Strategic benefits of using Young & Rubicam is its location and experience with other dairy clientele. They are located only a short distance from Rio De Janiero in the city of Sao Paulo (Y&R Brazil).. Given most of our advertising budget will be allocated to cities in the southern parts of Brazil, it will be beneficial that they are familiar to the region. In addition to location, Young & Rubicam currently represent Danone Yogurt in Brazil (Y & R Brazil). This gives them market expertise and research into our 43 industry on how to effectively penetrate the Brazilian market and sustain success. The growing importance of Ad agencies in Brazil and the established presence of Young & Rubicam will help fuel our brand entry and allow us to compete immediately. Brazil IMC The elements of the IMC we will utilize are global sales promotion, global public relations, and global advertising. Sales promotion will be a large portion of our IMC plan. We are still a relatively young brand in the world and have no presence in Brazil. Using consumer interaction methods and directly meeting, talking, and sharing samples with distributors and consumers will help grow repute. Our method for accomplishing this is implementing a similar vehicle to the CHOmobile in the United States. A large Chobani vehicle will travel across Brazil distributing samples and educating citizens of our brand and the benefits we hold over our competition. Global public relations will also aid in our promotional efforts. Chobani has a simple, consistent message across all channels of manufacturing, distribution, and marketing, which is their message of “how matters.”(New York Post, 2014) Not only this message, but also its efforts to promote sustainability and be charitable are reasons that we must maintain a consistent goodwill message in Brazil. A company is only as strong as its core competencies remain identical across different channels and borders. Advertising will be our final component of the IMC. It is the most visible channel of the IMC and must be used to a great degree, especially in the Brazilian market. We plan to use print, broadcast, and billboard advertisements. As stated earlier we plan to connect social media to each form of advertisement. Chobani currently has a similar platform in the United States. Billboards across the country show what consumers are saying about the Chobani brand through twitter and Facebook (Entreprenuer, 44 2012). Given the high use of social media in Brazil, the billboards displayed in Brazil will also have similar messages to promote interaction and increased social media postings of the Chobani brand. Conclusion In conclusion to our CIC analysis, STP framework, and strategic marketing program, we will revisit our specific recommendations. First, we strongly recommend the entry of the Brazilian market. Our brand aligns with the Brazilian people and culture, current health trends, and industry opportunities given our competitive advantage of being the healthies Greek yogurt on the market. Second, we recommend an incremental entry strategy consisting of a limited product line, production partnership, and agency partnership in order to avoid the full risks associated with a full-scale entry plan. Once enough success has been observed, Chobani can grow into the market with its other product lines and custom production facilities. Finally, we recommend getting in touch with the Brazilian people. The use of the 2016 Rio Olympics as a launch platform, the famous Brazilian soap operas, and tropical fruit flavors enjoyed by the market are all ways in which we intend to do this. Given these recommendations, the following next steps should be taken. In order to actually implement this new market entry plan there are a few steps that need to be taken. Before any sort of marketing platform can be launched, the details concerning product production and distribution must be nailed down. This requires extensive research in order to identify potential partners and initiate contact with one of the many yogurt/dairy distribution facilities that are currently present and functioning in Brazil that we feel best fits our goal and introduction strategy. With basis on market research data that has been collected, we 45 will attempt to partner with a facility that is located nearby the cities and locations that we hope to actually sell our product in, consequently eliminating lofty transportation and shipping costs. After contact has been made with this specific distributor we will begin to send home-base Chobani employees to the Brazilian facilities to help train and explain the process of yogurt production that will be required. After the partnership with the production and distribution facility has been solidified, it will now be important to select which marketing/ad agency to partner with in order to launch our marketing platform. By initiating this partnership, we will hope to avoid any cultural or language barriers that could potentially hinder the perception or performance of our brand or product. This will require significant research and communication in the field in order to identify which agency will be the most beneficial for us to work with. After both of these partnerships with production/distribution facilities and ad/marketing firms have been confirmed, the introduction of the Chobani brand and product line will hopefully be seamless and very affective. 46 References “Brazilian’s Media Habits.” The Brazil Business. 2015 “Revenue Generated by digital advertising agencies in Brazil from 2009 to 2013.” Statista, 2014. “Its not just samba and carnival: media and marketing in Brazil.” The guardian, 2014. “Droga5 No Longer Chobani's Lead Agency as Brand Brings Marketing In-House.” Advertising Age, 2015. “Leading Advertising agencies in Brazil in 2013, by investment in advertising.” Statista, 2014 “Y & R Brazil.” Y & R, 2015. “Chobani built billion dollar business with stolen marketing tactic: suit.” New York Post, 2014. “How Chobani yogurt used social media to boost sales.” Entreprenuer, 2012. 47