International Marketing Strategy Smucker’s Uncrustables in Germany Rachel Bauer, Pat Lynch, Sarah...

International International Marketing StrategyMarketing Strategy

Smucker’s Uncrustables in GermanySmucker’s Uncrustables in Germany

Rachel Bauer, Pat Lynch, Sarah vonFischer, Erik Wright

Uncrustables in Uncrustables in Germany?Germany?

Main Factors to Consider Main Factors to Consider Assessment of

potential market

Distribution

Segmentation and Targeting

Marketing mixMarketing mix


Main Factors to Consider Main Factors to Consider Assessment of Assessment of

potential marketpotential market

DistributionDistribution

Segmentation and Segmentation and TargetingTargeting


Assessment of Potential Assessment of Potential MarketMarket

Eating Habits of GermansEating Habits of Germans

Lunch is the primary meal of the day in Germany. It is Lunch is the primary meal of the day in Germany. It is typically a warm meal served around noon.typically a warm meal served around noon.

Recently consumers have begun to shift away from Recently consumers have begun to shift away from large main meals towards snacks and smaller dishes; large main meals towards snacks and smaller dishes; this could lead to increased interest in a product like this could lead to increased interest in a product like Uncrustables. Uncrustables.

Large family meals are still common at noontime on Large family meals are still common at noontime on Saturdays and Sundays Saturdays and Sundays


Frozen Food Market in GermanyFrozen Food Market in Germany In 2003 the German Frozen food In 2003 the German Frozen food

market reached a value of $6.84 market reached a value of $6.84 billionbillion

This was an increase of 13.8% This was an increase of 13.8% since 1999since 1999

The frozen food market includes The frozen food market includes frozen ready meals, frozen frozen ready meals, frozen deserts, frozen bakery products, deserts, frozen bakery products, frozen fruit and vegetables, and frozen fruit and vegetables, and frozen meats.frozen meats.


Frozen Food Market in GermanyFrozen Food Market in Germany

Frozen ready meals was the leading segment of the Frozen ready meals was the leading segment of the market that contributed $3.3 billion of the total revenue, market that contributed $3.3 billion of the total revenue, 48.6% of the of the market’s value.48.6% of the of the market’s value.

The German frozen food market is the largest in the The German frozen food market is the largest in the European Union and Eastern Europe.European Union and Eastern Europe.

Even though the market is mature, analysts expect the Even though the market is mature, analysts expect the growth rate to be moderate and confirm Germany’s growth rate to be moderate and confirm Germany’s position as the largest in Europe.position as the largest in Europe.

This is good news for Uncrustables in Germany.This is good news for Uncrustables in Germany.



Year $ million € million % Growth1999 6,008.2 5,319.72000 6,240.0 5,524.9 3.90%2001 6,495.5 5,751.1 4.10%2002 6,714.8 5,945.2 3.40%2003 6,837.2 6,053.7 1.80%

Source: Datamonitor D A T A M O N I T O R

This data shows the recent growth in the German frozen food market and the increasing net value of the

market



Geography % ShareRest of Europe 54.80%Germany 16.10%UK 15.00%France 14.10%Total 100.0%

Source: Datamonitor D A T A M O N I T O R

Compared to other European countries, Germany’s frozen food market holds a slight advantage in market

share


Future Market ExpectationsFuture Market Expectations

2005 is predicted to have the highest future 2005 is predicted to have the highest future growth growth

By 2008 analysts expect the frozen food By 2008 analysts expect the frozen food market to reach a value of $7.9 billion, which market to reach a value of $7.9 billion, which is a stronger growth prediction than for the UK is a stronger growth prediction than for the UK and Italian markets, and significantly higher and Italian markets, and significantly higher than the growth of the French market.than the growth of the French market.

If Smucker’s was to enter this market it would If Smucker’s was to enter this market it would be most beneficial to do it quickly.be most beneficial to do it quickly.


Ready Meal MarketReady Meal Market The German ready meal market has The German ready meal market has

reached a net worth of $2.6 billionreached a net worth of $2.6 billion

The market had a growth rate of The market had a growth rate of 6.7% between 1999-20036.7% between 1999-2003

Germany is currently third in ready Germany is currently third in ready meal market size behind France and meal market size behind France and the United Kingdomthe United Kingdom


Ready Meal MarketReady Meal Market

The leading segment of the ready meal market The leading segment of the ready meal market is the frozen ready meal segment accounting is the frozen ready meal segment accounting for 81.7% of the market value.for 81.7% of the market value.

The expected growth rates for this market is The expected growth rates for this market is expected to experience decline slightlyexpected to experience decline slightly

By 2008 the ready meal market is predicted to By 2008 the ready meal market is predicted to reach a net value of $3.3 billion, which reach a net value of $3.3 billion, which indicates growth of 5.1% in the 2003-2008 indicates growth of 5.1% in the 2003-2008 periods periods


Germany’s Economic ProspectsGermany’s Economic Prospects

The GNP is around $1.864 billion. More relevantly, The GNP is around $1.864 billion. More relevantly, they have a per capita GNP of $22,740, making them they have a per capita GNP of $22,740, making them one of the most affluent nations in Europe.one of the most affluent nations in Europe.

GNP is $22,740 per capita, and the GDP is $27,600 GNP is $22,740 per capita, and the GDP is $27,600 per capita, once again proving that the average per capita, once again proving that the average population should be able to afford our product.population should be able to afford our product.

Germany’s western part of the country is more affluent Germany’s western part of the country is more affluent than the former communist, eastern area.than the former communist, eastern area.


Germany’s Economic ProspectsGermany’s Economic Prospects

The total population of Germany is 82 million (more The total population of Germany is 82 million (more specifically, 82,531,700 at the end of 2003)specifically, 82,531,700 at the end of 2003)

Population growth has been slow since the 1960s, so Population growth has been slow since the 1960s, so no future change is expectedno future change is expected

There is sufficient income and population in Germany There is sufficient income and population in Germany for Smucker’s to invest their product in Germanyfor Smucker’s to invest their product in Germany


CompetitionCompetition

CompanyCompany market sharemarket sharePrivate label Private label 21.221.2Langnese-Iglo GmbH Langnese-Iglo GmbH 13.8 13.8Aldi GmbH & Co KG Aldi GmbH & Co KG 12.5 12.5Conditorei Coppenrath & Wiese GmbH & Co KG Conditorei Coppenrath & Wiese GmbH & Co KG 9.4 9.4Dr August Oetker Nahrungsmittel KG Dr August Oetker Nahrungsmittel KG 7.4 7.4Wagner Tiefkühlprodukte GmbH Wagner Tiefkühlprodukte GmbH 6.1 6.1

Companies well established in the German frozen food industry are listed above. These are the main competitors for Smucker’s upon entering Germany.



Langnese-Iglo has products such as frozen pizzas, Langnese-Iglo has products such as frozen pizzas, hamburgers, chicken sandwiches, fish sticks, pasta, hamburgers, chicken sandwiches, fish sticks, pasta, and baguettes.and baguettes.

Coppenrath & Wiese specializes mostly in breakfast Coppenrath & Wiese specializes mostly in breakfast rolls and dessertsrolls and desserts

Dr Oetker is mostly in the business of frozen pizza.Dr Oetker is mostly in the business of frozen pizza.

Wagner Tiefkühlprodukte GmbH offers a variety of Wagner Tiefkühlprodukte GmbH offers a variety of pizzas, bruchettas and wrapspizzas, bruchettas and wraps



Findus has come out Findus has come out with a product called with a product called Crispy PancakesCrispy Pancakes

Flavors include:Flavors include: 3 cheese3 cheese BeefBeef Sweet corn, bacon, Sweet corn, bacon,

and chickenand chicken

Assessment of potential Assessment of potential marketmarket

Dr. Oetker has come out Dr. Oetker has come out with frozen sandwicheswith frozen sandwiches

They microwave in 2 They microwave in 2 minutesminutes

Flavors includeFlavors include Chicken BBQChicken BBQ Hot PeppersHot Peppers Pizza StylePizza Style Tomato FetaTomato Feta HawaiiHawaii

Direct Competition


The distribution of Uncrustables in Germany depends on The distribution of Uncrustables in Germany depends on many different variables including the following:many different variables including the following:

Surface TransportationSurface Transportation

Geography (large cities and surrounding countries)Geography (large cities and surrounding countries)

Current sales and production facilities in GermanyCurrent sales and production facilities in Germany

Current suppliers and distributors in GermanyCurrent suppliers and distributors in Germany

German legislation pertaining to foreign direct German legislation pertaining to foreign direct investments, tariffs, and taxesinvestments, tariffs, and taxes

DistributionDistribution Surface Transportation Surface Transportation

The western states of Germany have a more advanced The western states of Germany have a more advanced transportation infrastructure, but government spending transportation infrastructure, but government spending is closing the gap.is closing the gap.

Ease of travel in different parts of the country is Ease of travel in different parts of the country is something to consider when deciding on the placement something to consider when deciding on the placement of different facilities in Germany.of different facilities in Germany.

In 2005, a new system is supposed to be implemented In 2005, a new system is supposed to be implemented to charge lorries (trucks) 12.4 euro cents per kilometer.to charge lorries (trucks) 12.4 euro cents per kilometer.

This makes truck travel a more expensive option.This makes truck travel a more expensive option.

DistributionDistribution Surface TransportationSurface Transportation

The railway system for passenger travel has The railway system for passenger travel has recently become more expensive and has lost recently become more expensive and has lost a lot of customers due to an economic a lot of customers due to an economic downturn in 2003.downturn in 2003.

Railways are still commonly used for freight Railways are still commonly used for freight services, with annual goods totaling 285 tons.services, with annual goods totaling 285 tons.

A problem with this source of transportation A problem with this source of transportation could be problems with monopolistic pricing for could be problems with monopolistic pricing for the DB (the federally sponsored company).the DB (the federally sponsored company).


The use of sea-going merchant The use of sea-going merchant vessels for transportation of vessels for transportation of goods is on the downturn, goods is on the downturn, totaling 246 tons in 2003 (less totaling 246 tons in 2003 (less than the railway’s 285 tons).than the railway’s 285 tons).

The most important port for The most important port for Germany is Rotterdam in the Germany is Rotterdam in the Netherlands, and the most used Netherlands, and the most used domestic port is in Hamburg domestic port is in Hamburg (accounting for 35% of all freight (accounting for 35% of all freight shipped to German ports).shipped to German ports).


Other main ports in Germany Other main ports in Germany are Wilhelmshave, are Wilhelmshave, Bremerhave, Bremen, Rostock, Bremerhave, Bremen, Rostock, and Lubeck.and Lubeck.

If transportation using sea-If transportation using sea-going merchant vessels was going merchant vessels was chosen to be used by chosen to be used by Smucker’s for Uncrustables, it Smucker’s for Uncrustables, it would be important to consider would be important to consider the implications of locating the implications of locating Uncrustables facilities by one of Uncrustables facilities by one of these major cities.these major cities.


The most used airport for freight and The most used airport for freight and passenger travel is Rhein-Main Airport near passenger travel is Rhein-Main Airport near Frankfort. Frankfort.

Cologne-Bonn is the second most used for Cologne-Bonn is the second most used for freight traffic.freight traffic.

Again, if using airport for freight transportation, Again, if using airport for freight transportation, it would be important to consider a distribution it would be important to consider a distribution facility near one of these two cities.facility near one of these two cities.


RoadsRoads: 226,000 km in 1992 (11,000 km of : 226,000 km in 1992 (11,000 km of these roads are at least four lanes)these roads are at least four lanes)

RailroadsRailroads: 40,000 km in 1994 (16,000 km of : 40,000 km in 1994 (16,000 km of which are electrified)which are electrified)

AirportsAirports: 660 total (12 civilian airports : 660 total (12 civilian airports provide passenger and cargo service within provide passenger and cargo service within the country and to the rest of the world)the country and to the rest of the world)


PortsPorts: several dozen large, well-equipped : several dozen large, well-equipped ocean and inland portsocean and inland ports

Inland WaterwaysInland Waterways: 6,900 km of navigable : 6,900 km of navigable inland waterways, including extensive inland waterways, including extensive canal systems (inland waterways account canal systems (inland waterways account for about 20% of freight shipping)for about 20% of freight shipping)

DistributionDistribution GeographyGeography

Germany shares Germany shares boundaries with nine boundaries with nine other countries:other countries: DenmarkDenmark PolandPoland The Czech RepublicThe Czech Republic AustriaAustria SwitzerlandSwitzerland FranceFrance LuxembourgLuxembourg BelgiumBelgium The NetherlandsThe Netherlands

This is important to consider This is important to consider when choosing where to put when choosing where to put production and distribution production and distribution facilities. Putting a facility in facilities. Putting a facility in a neighboring country could a neighboring country could be the most cost-efficient.be the most cost-efficient.

DistributionDistribution GeographyGeography

The three largest cities are Berlin The three largest cities are Berlin (3.4 million), Hamburg (1.7 million), (3.4 million), Hamburg (1.7 million), and Munich (1.2 million).and Munich (1.2 million).

Concentration of populationConcentration of population The most densely populated cities are The most densely populated cities are

Berlin (3,898 persons per sq. km), Berlin (3,898 persons per sq. km), Hamburg (2,236 persons per sq. km), Hamburg (2,236 persons per sq. km), and Bremen (1,697 persons per sq. and Bremen (1,697 persons per sq. km).km).

1/5 of the nation’s total population is in 1/5 of the nation’s total population is in North Rhine-Westphalia (the state North Rhine-Westphalia (the state who’s cities include Berlin, Bremen, who’s cities include Berlin, Bremen, and Hamburg.and Hamburg.

DistributionDistribution Current Sales in GermanyCurrent Sales in Germany

There are currently no sales There are currently no sales offices or production facilities offices or production facilities in Germany.in Germany.

Also, there are no Smucker’s Also, there are no Smucker’s products on store shelves in products on store shelves in Germany.Germany.

Smucker’s products can be Smucker’s products can be bought from online groceries.bought from online groceries.

DistributionDistribution Current Distributors and Suppliers in Current Distributors and Suppliers in Germany Germany

Smucker’s does not own its Smucker’s does not own its suppliers or distributors. It suppliers or distributors. It does not grow its own fruit, nor does not grow its own fruit, nor does it manufacture its own does it manufacture its own labels or storage containers. labels or storage containers.

When going into Germany, one When going into Germany, one would need to decide what would need to decide what suppliers and distributors are suppliers and distributors are available and the best to use.available and the best to use.

DistributionDistribution Production in GermanyProduction in Germany

Smucker’s Uncrustables are currently Smucker’s Uncrustables are currently produced in a manufacturing facility in produced in a manufacturing facility in Scottsville, KY.Scottsville, KY.

It would be important to decide whether to It would be important to decide whether to produce Uncrustables in Germany or to import produce Uncrustables in Germany or to import them from Kentucky.them from Kentucky.

DistributionDistribution Production in GermanyProduction in Germany

Many factors were at play in Many factors were at play in Smucker’s decision to close Smucker’s decision to close some plants. A strike some plants. A strike affected the Woodburn affected the Woodburn facility last year, though local facility last year, though local sources say the workforce sources say the workforce included many second-included many second-generation employees who generation employees who were willing to work with the were willing to work with the company to improve company to improve efficiencies. efficiencies.

When considering When considering where to have a where to have a production facility in production facility in Germany, it will be Germany, it will be important to look at important to look at factors such as the factors such as the worker’s worker’s demographics and demographics and attitudes in addition attitudes in addition to factors such as to factors such as cost.cost.

DistributionDistribution Foreign Direct InvestmentsForeign Direct Investments

Germans and Americans regularly make investments in Germans and Americans regularly make investments in each other’s countries. each other’s countries.

Germany is the United State’s largest European trading Germany is the United State’s largest European trading partner and fifth largest partner in the world.partner and fifth largest partner in the world.

France, the Netherlands, and the United States led the France, the Netherlands, and the United States led the list of Germany’s foreign investors during 2003.list of Germany’s foreign investors during 2003.


The profit rate of US direct investment in The profit rate of US direct investment in Germany was 5.1% in 2003, compared Germany was 5.1% in 2003, compared with 3.7% a year earlier.with 3.7% a year earlier.

This is showing that US investments in This is showing that US investments in Germany are becoming more and more Germany are becoming more and more profitable.profitable.


German government officials, and the population in German government officials, and the population in general welcome foreign investment that provide new general welcome foreign investment that provide new jobs. There are no serious limitations on new projects.jobs. There are no serious limitations on new projects.

Foreign investors encounter the same conditions as their Foreign investors encounter the same conditions as their German counterparts in obtaining licenses, securing German counterparts in obtaining licenses, securing building permits, and gaining approval for investment building permits, and gaining approval for investment incentives.incentives.

However, the German government often opposes hostile However, the German government often opposes hostile takeovers. takeovers.

The next slide shows an example…The next slide shows an example…

DistributionDistribution Squeeze-out exampleSqueeze-out example A provision of the take-over law concerning squeeze-outs A provision of the take-over law concerning squeeze-outs

has been used frequently. According to the law, an investor has been used frequently. According to the law, an investor who holds at least 95% of equity can force the remaining who holds at least 95% of equity can force the remaining shareholders to sell their shares in the company.shareholders to sell their shares in the company.

Since the first quarter of 2003, however, when Procter & Since the first quarter of 2003, however, when Procter & Gamble of the US unsuccessfully tried to use the squeeze-Gamble of the US unsuccessfully tried to use the squeeze-out provision to take over all of Walla, a German hair-care out provision to take over all of Walla, a German hair-care company, investors have rarely been able to reach the company, investors have rarely been able to reach the necessary 95% threshold.necessary 95% threshold.

Minority shareholders will deliberately increase their stakes Minority shareholders will deliberately increase their stakes to force the investor to make a higher offer.to force the investor to make a higher offer.


Demographics: targeted towards moms across the United Demographics: targeted towards moms across the United States—most likely people of middle- or upper-range incomes States—most likely people of middle- or upper-range incomes (because it is definitely cheaper for a mom to make her own (because it is definitely cheaper for a mom to make her own peanut-butter and jelly sandwiches). This is also mostly peanut-butter and jelly sandwiches). This is also mostly targeted toward working mothers. targeted toward working mothers.

Geographic: not necessarily specific geographically, although Geographic: not necessarily specific geographically, although the main focus now is in the United States—not the the main focus now is in the United States—not the international market.international market.

Smucker’s may consider entering Uncrustables in the Smucker’s may consider entering Uncrustables in the wealthier, western half of the country for easier penetration of wealthier, western half of the country for easier penetration of the marketthe market

Segmentation and Segmentation and Targeting Targeting

The Average FamilyThe Average Family

““Our research shows that the average family Our research shows that the average family doesn’t know what they’re going to have for doesn’t know what they’re going to have for dinner until 4 p.m., and probably the most dinner until 4 p.m., and probably the most popular category of food is handheld products popular category of food is handheld products you can take in the car,” Smucker’s says.you can take in the car,” Smucker’s says.


Children and SchoolsChildren and Schools (although children are not directly (although children are not directly targeted)targeted)

““We continue to focus on We continue to focus on UncrustablesUncrustables, our line of , our line of crustless, thaw-and-serve peanut butter and jelly crustless, thaw-and-serve peanut butter and jelly sandwiches. Within the school foodservice market, sandwiches. Within the school foodservice market, sales of sales of UncrustablesUncrustables have increased substantially have increased substantially over last year, yet to date we are in fewer than 20 over last year, yet to date we are in fewer than 20 percent of school districts nationally.” percent of school districts nationally.”

““Reaching a later percentage of children with a Reaching a later percentage of children with a branded food item, served as a meal or nutritious branded food item, served as a meal or nutritious snack, is a most exciting prospect for our Company.” snack, is a most exciting prospect for our Company.”


Amusement Parks and Ball ParksAmusement Parks and Ball Parks

The The UncrustablesUncrustables line was also successful this line was also successful this year in traditional foodservice outlets, year in traditional foodservice outlets, especially in the recreation category where especially in the recreation category where initial placements have included initial placements have included Walt Disney Walt Disney WorldWorld and several major league baseball and several major league baseball parks.parks.


In the United States retail market the Company’s In the United States retail market the Company’s products are sold through brokers to food retailersproducts are sold through brokers to food retailers food wholesalersfood wholesalers club storesclub stores mass merchandisers mass merchandisers military commissaries. military commissaries.


Psychographics: for people with interests that keep them Psychographics: for people with interests that keep them on the goon the go

Behavior: this product is most likely for the loyal buyer. Behavior: this product is most likely for the loyal buyer. Smucker’s is hoping to convince mothers that this product Smucker’s is hoping to convince mothers that this product is convenient enough to keep handy around the house. is convenient enough to keep handy around the house.

Also, Smucker’s is most likely hoping that once a mother Also, Smucker’s is most likely hoping that once a mother buys the Uncrustables the first time, the kids will be buys the Uncrustables the first time, the kids will be hooked and create a demand for the mother to continue hooked and create a demand for the mother to continue buying the product. buying the product.

Benefits: convenienceBenefits: convenience


Age Distribution in GermanyAge Male Female Male (%) Female (%)

0-4 1,924 1,825 51.3% 48.7%

5-9 2,061 1,953 51.3% 48.7%

10-14 2,328 2,210 51.3% 48.7%

15-19 2,403 2,277 51.3% 48.7%

20-24 2,418 2,298 51.3% 48.7%

25-29 2,353 2,227 51.4% 48.6%

30-34 3,023 2,851 51.5% 48.5%

35-39 3,743 3,504 51.6% 48.4%

40-44 3,542 3,360 51.3% 48.7%


The previous graph displays the Target Market The previous graph displays the Target Market for Uncrustables, which consists of 14,697 for Uncrustables, which consists of 14,697 million males and 13,878 million females, million males and 13,878 million females, which includes parents and childrenwhich includes parents and children

If Smucker’s can tap into this vast population in If Smucker’s can tap into this vast population in their target market, Uncrustables could be very their target market, Uncrustables could be very profitableprofitable

Marketing MixMarketing Mix ProductProduct

Uncrustables are a sandwich made up of white bread, Uncrustables are a sandwich made up of white bread, and with no crust and with no crust

It come in three flavors, Grape, Strawberry and Grilled It come in three flavors, Grape, Strawberry and Grilled CheeseCheese

The idea of new flavors and even seasonal ones is The idea of new flavors and even seasonal ones is something that has been successful in the German something that has been successful in the German market market

Germans do eat peanut butter but not necessarily Germans do eat peanut butter but not necessarily peanut butter and jelly sandwiches. This may be peanut butter and jelly sandwiches. This may be something to consider pertaining to flavor.something to consider pertaining to flavor.

Marketing MixMarketing Mix ProductProduct

Most get their food from both supermarkets and Most get their food from both supermarkets and specialty shops (like bakeries, butcher shops, etc.)specialty shops (like bakeries, butcher shops, etc.)

Germans tend to shop more frequently than Germans tend to shop more frequently than Americans, usually 2-4 times per weekAmericans, usually 2-4 times per week

The typical German household has a significantly The typical German household has a significantly smaller refrigerators than Americans and have a smaller refrigerators than Americans and have a separate larger freezer in the basementseparate larger freezer in the basement

This all indicates that Germans may not be as This all indicates that Germans may not be as interested in the larger packages of Uncrustables interested in the larger packages of Uncrustables (such as the 10 and 18 pack). A pack of 4 may be (such as the 10 and 18 pack). A pack of 4 may be more appealing to Germans.more appealing to Germans.

Marketing MixMarketing Mix PackagingPackaging

Uncrustables are packaged in a cardboard box with Uncrustables are packaged in a cardboard box with each sandwich individually wrapped. each sandwich individually wrapped.

The individually wrapped sandwiches would also be The individually wrapped sandwiches would also be easy to store in the freezer outside of the box.easy to store in the freezer outside of the box.

The design has a picnic feel to it and the colors of the The design has a picnic feel to it and the colors of the box vary with the different flavors.box vary with the different flavors.

The package looks “All-American” which is not The package looks “All-American” which is not necessarily a good thing. necessarily a good thing.


The packages are produced in English and The packages are produced in English and Smucker’s name is prominently displayed on Smucker’s name is prominently displayed on the front of the box along with the Uncrustables the front of the box along with the Uncrustables name. name.

The nutritional facts and ingredients are listed The nutritional facts and ingredients are listed on the sides of the box, and an explanation of on the sides of the box, and an explanation of what Uncrustables are (including pictures) is what Uncrustables are (including pictures) is on the back.on the back.


The Germans have recently installed new laws The Germans have recently installed new laws regarding waste disposal. In responses, regarding waste disposal. In responses, companies are making more environment companies are making more environment friendly packaging.friendly packaging.

Green dots are starting to appear on packages Green dots are starting to appear on packages that are recyclable, and while it is not required, that are recyclable, and while it is not required, it makes packages more acceptable. it makes packages more acceptable.

Marketing MixMarketing Mix PlacePlace

The Industrial Investment Council offers consulting The Industrial Investment Council offers consulting free of charge for investors in eastern Germany. free of charge for investors in eastern Germany. This includes:This includes: Market researchMarket research Identification of partnersIdentification of partners Permit applications Permit applications Advice on financial incentivesAdvice on financial incentives

The investment allowance law provides for additional The investment allowance law provides for additional incentives for the acquisition of buildings, plants, and incentives for the acquisition of buildings, plants, and equipment in eastern Germany. equipment in eastern Germany. Regular incentives are 12.5% of investment cost; for small and Regular incentives are 12.5% of investment cost; for small and

medium-sized companies, the rate is 25%, and it is increased medium-sized companies, the rate is 25%, and it is increased by 2.5% in regions close to the Polish and Czech borders.by 2.5% in regions close to the Polish and Czech borders.

Marketing MixMarketing Mix PlacePlace

One thing to remember when analyzing the best One thing to remember when analyzing the best location for a production facility is not necessarily location for a production facility is not necessarily the place that costs the least.the place that costs the least.

Smucker’s realized this when they decided to Smucker’s realized this when they decided to close optimize their supply chain and consolidate close optimize their supply chain and consolidate manufacturing facilities. Smucker’s closed plants manufacturing facilities. Smucker’s closed plants in Watsonville, California, Woodburn, Oregon, in Watsonville, California, Woodburn, Oregon, and West Fargo, North Dakota allowing for more and West Fargo, North Dakota allowing for more efficient product production and distribution. efficient product production and distribution.

Marketing MixMarketing Mix Promotion/MessagePromotion/Message

““Our first priority was to serve our loyal Our first priority was to serve our loyal existing customers. We’ve continued to existing customers. We’ve continued to

pursue new customers, but (we’re) really pursue new customers, but (we’re) really targeting the fall, back to school time targeting the fall, back to school time

period for implementing that new period for implementing that new business.” business.”


Uncrustables are a great time saving product for those Uncrustables are a great time saving product for those parents on the go. With more and more two parent parents on the go. With more and more two parent working families, the idea of a easy to serve, ready to working families, the idea of a easy to serve, ready to go product is always a good one. go product is always a good one.

The idea of a convenient, low cost and also good The idea of a convenient, low cost and also good tasting product can be seen with Uncrustables tasting product can be seen with Uncrustables

Lastly, the flavors of the product are what some would Lastly, the flavors of the product are what some would call trademark American products; a good old fashion call trademark American products; a good old fashion PB&J and the Grilled Cheese. Something that children PB&J and the Grilled Cheese. Something that children will associate with will associate with


With capacity shortcomings, Smucker’s pulled most of With capacity shortcomings, Smucker’s pulled most of its advertising and promotion for the Uncrustables line. its advertising and promotion for the Uncrustables line.

Richard Smucker, co-CEO and CFO had this to say,Richard Smucker, co-CEO and CFO had this to say,

“ “As a result, growth and sales projections As a result, growth and sales projections for the brand have been difficult to ascertain. We for the brand have been difficult to ascertain. We have pulled quite a bit of support for the brand, have pulled quite a bit of support for the brand,

but once we get back up to full support, then we’ll but once we get back up to full support, then we’ll have a better feel for growth”have a better feel for growth”

Marketing MixMarketing Mix Promotion/MediaPromotion/Media

In Germany print media holds a 48% share of In Germany print media holds a 48% share of advertising and is the leading medium for advertising and is the leading medium for advertisementadvertisement

Television is the most popular medium of Television is the most popular medium of communication and entertainment. Today some 30 communication and entertainment. Today some 30 stations compete fiercely for audience ratings. stations compete fiercely for audience ratings.

Each of the 16 Landers (states) are solely Each of the 16 Landers (states) are solely responsible for their television broadcast activities. responsible for their television broadcast activities.


Uncrustables received free advertising Uncrustables received free advertising when Liz Crenshaw of NBC4 did a when Liz Crenshaw of NBC4 did a segment on the product. segment on the product.

Currently, Uncrustable ads can be seen Currently, Uncrustable ads can be seen regularly on television and coupons are regularly on television and coupons are available in local newspapers. available in local newspapers.

However, the most buzz about However, the most buzz about Uncrustables can be found on the Uncrustables can be found on the internet. internet.

Individual store promotion: samples and Individual store promotion: samples and displaysdisplays

Marketing MixMarketing Mix Promotion/MediaPromotion/Media

The Uncrustables brand name has not been the The Uncrustables brand name has not been the sponsor of any major event, but Smucker’s on the sponsor of any major event, but Smucker’s on the other hand has been the main contributor to an ice-other hand has been the main contributor to an ice-skating event and a special episode of Family Feud skating event and a special episode of Family Feud has featured some the Smucker’s Ice-Skating stars.has featured some the Smucker’s Ice-Skating stars.

In Germany over 27 million people belong to sports In Germany over 27 million people belong to sports club and the most popular sport in Germany is Fussball club and the most popular sport in Germany is Fussball (Soccer). Event and team sponsorship is a major (Soccer). Event and team sponsorship is a major player in advertising in Germany as well as player player in advertising in Germany as well as player endorsement. endorsement.

Marketing MixMarketing Mix PricePrice

As we said before, pricing would not be a major issue As we said before, pricing would not be a major issue in Germany because the per capita GNP is relatively in Germany because the per capita GNP is relatively high ($22,740).high ($22,740).

The price would depend on the extra expense of either The price would depend on the extra expense of either importing the goods from the United States or importing the goods from the United States or producing them in Germany.producing them in Germany.

There are high tariffs on goods imported to the EU from There are high tariffs on goods imported to the EU from the United States, particularly on processed foods the United States, particularly on processed foods containing added sugar, flour, starch, and milk. containing added sugar, flour, starch, and milk.

Marketing MixMarketing Mix Price/TaxPrice/Tax

The effective rate for trade tax varies by location from just The effective rate for trade tax varies by location from just under 12-20%. It is around 18% for most larger cities.under 12-20%. It is around 18% for most larger cities.

This tax is deductible as an expense for corporation tax.This tax is deductible as an expense for corporation tax.

German business profits are subject to 2 taxes; German business profits are subject to 2 taxes; corporation tax which is levied at 25% and subject to a corporation tax which is levied at 25% and subject to a surcharge of 5.5%. The surcharge does not apply to surcharge of 5.5%. The surcharge does not apply to companies with headquarter and management outside of companies with headquarter and management outside of Germany.Germany.

A foreign company’s German branch would be charged A foreign company’s German branch would be charged both corporation tax and trade tax.both corporation tax and trade tax.

Marketing MixMarketing Mix Price/TaxPrice/Tax

There is a 7% sales tax on food. This is charged to the There is a 7% sales tax on food. This is charged to the manufacturer, not the consumer.manufacturer, not the consumer.

All these factors could ad to the price of selling All these factors could ad to the price of selling Uncrustables in Germany.Uncrustables in Germany.

Marketing MixMarketing MixPositioning Against Positioning Against


Intermezzo are sold at a cost of .99 euro. With the Intermezzo are sold at a cost of .99 euro. With the current exchange rate of $1/1.32 Euro, the cost of one current exchange rate of $1/1.32 Euro, the cost of one Intermezzo is about $1.31 (this includes tax).Intermezzo is about $1.31 (this includes tax).

In the U.S. Uncrustables cost about $.75 per sandwich In the U.S. Uncrustables cost about $.75 per sandwich and usually come in packages of 4, 10, or 18.and usually come in packages of 4, 10, or 18.

Intermezzo

Marketing MixMarketing Mix Positioning Against CompetitionPositioning Against Competition

Uncrustables needs to consider the price of Uncrustables needs to consider the price of their competitors to decide if they want to their competitors to decide if they want to position themselves based on price.position themselves based on price.

A leader in the German frozen food industry, A leader in the German frozen food industry, Frosta, decided to position themselves on Frosta, decided to position themselves on quality rather than low cost. quality rather than low cost.

They suffered a large drop in sales.They suffered a large drop in sales.

Marketing MixMarketing Mix Positioning Against CompetitionPositioning Against Competition

Crispy pancakes were developed “for kids by kids.”Crispy pancakes were developed “for kids by kids.”

Unlike Crispy pancakes, Smucker’s does not directly target Unlike Crispy pancakes, Smucker’s does not directly target children in Uncrustables promotion.children in Uncrustables promotion.

Crispy pancakes are served in many schools in Germany.Crispy pancakes are served in many schools in Germany.

Smucker’s has recently been promoting Uncrustables the same Smucker’s has recently been promoting Uncrustables the same way by putting them within the school foodservice market. way by putting them within the school foodservice market.

Smucker’s needs to consider this direct competition for the Smucker’s needs to consider this direct competition for the grilled cheese flavor in schools.grilled cheese flavor in schools.

Crispy Pancakes

Questions?Questions?

International Marketing Strategy Smucker’s Uncrustables in Germany Rachel Bauer, Pat Lynch, Sarah...

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