Trader Joe’s - International Marketing Plan

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MBA 686 International Marketing The Futurist: Kerry Andrews & Francis Ukpolo Trader Joe’s International Marketing Plan

Transcript of Trader Joe’s - International Marketing Plan

Page 1: Trader Joe’s - International Marketing Plan

MBA 686 International Marketing

The Futurist:Kerry Andrews

& Francis Ukpolo

Trader Joe’sInternational Marketing Plan

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MBA 686 International Marketing

Executive Summaryo Trader Joe’s seeks to expand its brand by entering its first market outside of the United States

o This international marketing plan seeks to identify and evaluate the best foreign markets for TJ’s

by selecting market indicators that are potentially impactful on consumer acceptance of TJ’s and

its unique culture and brand

o Upon identifying the best entry markets for Trader Joe’s, thereafter we will evaluate the cultural

dimensions and develop an entry mode and marketing strategy for the corresponding markets

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SWOT Analysis

• Unique Natural Products• Strategically Placed Stores• Public Image• Low Prices• Supply Chain

• Strong Competition• Geographic Concentration• Product Recalls• Limited Product Selection

• International Expansion• Product Expansion• Supply Chain Expansion

• Inflation• Competition• Consumer Trends and New Concepts

Strengths Weaknesses

Opportunities Threats

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Foreign Market Indicators1. The Big Mac Index – The Index measures purchasing power parity among nations.

2. Alcohol Consumption – A portion of TJ’s revenue is generated by the sale of alcohol.

3. Health spending per person – TJ’s focus on natural foods appeals the health conscious.

4. Income Level Category – Countries that have an increasing middle class tend to shift focus towards necessity items to

trendy items.

5. Divorce Rates – In the U.S., men grocery shop in almost equal numbers to women.

6. Per Capita Income – A high per capita income indicates strong purchasing power.

7. Competitive Conditions – Evaluating the competition before entering the market will help TJ determine best practices

and pitfalls to avoid.

8. Consumer Receptivity to Foreign Products – Consumer receptivity to foreign products is critical in determining TJ’s

potential for success.

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Foreign Market Assessment for Trader Joe’s

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Foreign Market Matrix ResultsRank Country Score

1 Canada 9.67 2 New Zealand 9.50 3 Italy 9.47 4 Sweden 9.38 5 United Kingdom 9.29 6 Switzerland 9.24 7 Denmark 9.10 8 Norway 9.01

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Hofstede Analysis Results

Power Distance Individualism Masculinity Uncertainty Avoidance0

10

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90

100

CanadaNew ZealandU.S

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Canada and New Zealand have been identified as the best fit for TJ’s initial foreign expansion effort. A full marketing plan development is required on these two countries to further assess the proper entry method. Large Market

Weak Competition

Great Infrastruture

Highly Competitive Grocery Industry

High literacy level and skilled workfroce

Receptive to foreign investors

Canada New Zealand

Foreign Market Selection

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Canada’s National Business Environment

Canada has a population just lessthan 30 million people in a countrytwice the area of the United States.The heritage of Canada was Frenchand English; however, significantimmigration from Asia and Europe’snon-French and English countrieshas broadened Canada's culturalrichness. Canada's three major citiesare distinctively, even fiercelydifferent from one another eventhough each is a commerciallythriving metropolitan center.

People Government Geography

In 2012, European and U.S.sovereign debt worries, togetherwith the consequent lessening ofdemand for commodities, resulted

inweaker than expected stockmarkets and reduced confidencelevels throughout much of the world,including Canada. For 2013, GDPgrowth for Canada is expected to bemoderate, at around 2%. TheCanadian dollar spent much of 2012trading slightly above par to the U.Sdollar. Inflation continues to remainvery low (McCarthy, 2013).

Canada is located on the upperportion of North America. It is madeup of thirteen distinct provinces. Alberta is the largest populatedprovince. However, BritishColumbia is home to Vancouver andOntario is home to Toronto. Eachprovince is known for their distinctculture.

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New Zealand’s National Business Environment

New Zealand has a population ofslightly less than 4 million people withmost living in the key cities. The largemajority of the population (89%) hasa European heritage, primarilyEnglish. Therefore, English is thepredominant language andChristianity the largest religion. Thestandard of living is high, and theirliteracy rate is 100%. The stateprovides extensive social services forthe welfare of its citizens, and hasone of the most comprehensivehealth care programs in the world.

People Government Geography

New Zealand gained itsindependence from the British in1947 and models its governmentstructure to the British

parliamentarysystem. The government in NewZealand provides funding to help

aidthe growth of local business and itdoes not present trade barriers thatdiscourage foreign investors forentering the market.

The country has about 270,000square kilometers and consists oftwo islands (The North Island andthe South Island).

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Canada’s Market Size and Potential

Canada’s economy relies heavily onits natural resources especially itsmetal production, logging, and oilsectors. The natural resourcesaccount for 13 percent of its GDP andabout 50 percent of its exports. Theabundance of metal in Canada hasallowed for the country to excel in itsmanufacturing sector with theautomobile and aircraft industry.About 950,000 Canadians work innatural resource sectors, whileanother 850,000 people areemployed serving those sectors

Economy Infrastructure Media & Technology

According to the CanadianInfrastructure Report Card, theinfrastructure in the country hasbeen rated “Fair”. The report givesCanada an overall grade of “Fair”

forits roads

Canada received a “Good” rating forits water infrastructure despite thefact that some of its infrastructuresrated “Very Poor” for the conditionsof their water pipes

Canada has excellenttelecommunications and currentlyhas one of the world’s highest levelsof universal telephone service.Canadian communication systemsinclude satellite communications,national data networks, optical fibrenetworks, cellular telephony, cableTV, and virtually universal Internetaccess. Canadians have greateraccess to cable television servicethan the people of any other nation.

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New Zealand’s Market Size and Potential

New Zealand follows a free enterprise system

with orderly marketing products. The nationdepends heavily on its international trade anddeals with a wide range of trade partners. Itsbiggest trade partners are Australia, the U.S,China, and Japan. According to Forbes, NewZealand’s economy is closely tied toAustralia’s, and both held up better than mostduring the global financial crisis. Thedownside to the resilience of its economy isthat the New Zealand dollar has appreciated,making the country’s agricultural exports

moreexpensive. The higher prices have helped topush up unemployment to 7.3%—the highestlevel since 1999.

Economy Infrastructure Media & Technology

New Zealand has a great roadinfrastructure. Like most Europeancountries the traffic runs on the lefthand side. The government recentlyproposed to spend $21 billion on

thedevelopment of their roads andanother $0.7 billion on publicTransportation.

The water management system inNew Zealand has faced a lot ofcriticism over the years due to itsheavy pollution problem, which is aresult of its increasing activities inAgriculture.

According to the New Zealand SectorsReport, New Zealand has well-developed telecommunications infrastructure. The Government is working with the sector through the Ultra-Fast Broadband (UFB) and Rural Broadband Initiative (RBI) programs to improve Internet access and speed for all New Zealanders.

The telecommunications sector is domestically focused, and is not a significantcontributor to exports. Telecommunications businesses globally and in New Zealand are having to develop new business models to meet the increasing demand for high speed data, particularly with the rapid adoption ofsmartphones and other mobile devices. Atthe same time revenues from traditionalfixed-line telephony services are declining.

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Competitive Environment

o There is limited competition to Trader

Joe’s in Canada

o Pirate Joe’s is an unauthorized retailer

which resells TJ’s products purchased

by the owner once a week

o Planet Organics is another competitor

with eigth locations.

o There are two major competitors in

the grocery store market (Foodstuffs

and Woolworths)

o Weak competition in the natural or

organic product line

New ZealandCanada

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Entry Mode Selection

o The first option to gain entry into Canada is to acquire TJ’s nearest competition in the country.o Pirate Joe’so Planet Organico Choice Market

o Second option is to partner with a major real estate management company to identity best locations and leasing aggrements

o A strategic alliance with one of the two major market competitors would be ideal. Foodstuffs, a locally owned grocer with a non-traditional business structure, a co-operative would be the first choice. The co-operative structure suggests TJ’s will be able to maintain a high level of independence despite the alliance

New ZealandCanada

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Target Market

o Adults 18-50o Middle class income levelo Highly educatedo Located in urban areas

o Adults 18-50o Middle classo Highly educated

New ZealandCanada

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Marketing Objectives

o Open ten Trader Joe’s store by the end of 2014

o Each store reporting profit margins of 6% by end of 2014

o Have 10% year over year revenue growth with a mature profit margin of 8%

o Open four Trader Joe’s stores by June 2015

o Open a flagship store in Auckland by December 2014

o Establish supply chains for perishable items such as eggs, milk, etc.

New ZealandCanada

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Marketing Strategies

Product Pricing Promotion Distribution

Focus on the “Four Ps”

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Marketing StrategiesProduct Pricing Promotion Distribution

New ZealandCanada

o Determine which products have the

strongest appeal to local consmers

o Click to insert text

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Marketing StrategiesProduct Pricing Promotion Distribution

New ZealandCanada

o Pricing in Canada will be adjusted based on

purchasing parity between Canada and the

United States

o Competitive pricing strategy will also be

employed

o It is important for TJ’s to retain its image as a

low cost natural grocer when there are other

competitors such as Whole Foods in the

market.

o Click to insert text

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Marketing StrategiesProduct Pricing Promotion Distribution

New ZealandCanada

o TJ’s will employee many of their current

promotion strategies in Canada

o TJ’s will continue to use the frequent flyer, and

in store sampling as well as stylized signage

and displays within the store

o Print ads will be purchased in small

independent publications as well as local

newspapers

o Internet banner ads will be purchased on

locally based sites

o Click to insert text

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Marketing StrategiesProduct Pricing Promotion Distribution

New ZealandCanada

o For British Columbia and Alberta, TJ’s will take

advantage of existing supply chains in

Washington

o Train or truck will be used to ship TJ’s products

from its existing suppliers

o Efforts will be made to utilize the supply chains by

the acquired Planet Organics Company for TJ’s

perishable items

o International products will be flown or shipped in

to the two Major ports of Canada, Port Metro in

Vancouver, and the Port of Toronto

o Click to insert text

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Final Recommendations

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