International Marketing
Essay Preview: International Marketing
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1.0 Executive Summary
Saturation of Walkers Snack Foods home market in the UK has encouraged the companys Executive Directors to examine the option of launching internationally. After analysing the internal and external environment, the decision was taken to launch the Walkers brand into East China. China was identified as a significant growth market for foreign branded snack foods. Walkers has put in place a plan to enter the market through Foreign Direct Investment with the establishment of a wholly owned subsidiary. In order to coordinate Walkers operations in China, a series of marketing objectives have been established. These objectives will be achieved through the implementation of a tactical Marketing Mix, which has been adapted for local market conditions. Implementation of set marketing objectives will be monitored by control mechanisms, with adjustments initiated where necessary. Walkers investment into the Chinese market provides good short-term opportunities with a long term potential for growth throughout East Asia.
2.0 Introduction
2.1 Context and Reasons for the Firms Internationalisation Decision
Walkers Snack Foods Ltd. , originally Walkers Ltd., launched its first brand of crisps in 1948. Since the early days Walkers has grown dramatically in size, today employing more than 4,000 people in fifteen locations around the UK. It is estimated that 11 million people in the UK eat a Walkers product everyday. Walkers Snack Foods Ltd. is now a wholly owned subsidiary of PepsiCo Inc , but still has control over its own operations.
Despite a number of new product launches and a variety of innovative marketing techniques, Walkers is beginning to see saturation of the UK snack foods market. Walkers current market share in the UK stands at 44.5%, based on 2002 figures. Walkers has had great success in the UK, but there has been no attempt to internationalize the brand. PepsiCo, Walkers parent company, are currently looking to grow their presence in Asia. PepsiCos snack food division, FritoLay, is currently selling a number of products into China, Hong Kong and Japan. In each country, FritoLay has established a growing presence, but is still facing strong competition from other firms operating in the area. The Asian market for snack foods is a strong growth market, set in the background of a developing economy.
The Walkers Crisps brand has a number of distinctive features that makes it a viable choice for launch into markets in Asia. Amongst the distinctive features are the wide range of flavours, the style of the crisps and the traditional British brand image. With an international launch Walkers could escape the saturation of the home market and at the same time gain the support of PepsiCo, a company who are keen to earn an early market leader position in a number of growing markets.
2.2 Definition of Unfamiliar Terms
There are a number of terms specific to the Chinese market that will be referred to in the Marketing Plan. Renminbi (RMB) is the currency of China. In this report an exchange rate of RMB 13.5 to the British pound sterling has been assumed. Office Ladies (OL) will be referred to as a target market segment. OLs are single women, living at home with a full time office career and disposable income. Little Emperors are also referred to as a target market group. These are children who have a large amount of support from parents and grandparents due to Chinas one child policy. Guanxi is also mentioned, which in China is the establishment of business contacts.
2.3 Specific Objectives of the Report
The International Marketing Report aims to identify potential opportunities to launch the Walkers Crisps brand in one or more countries in the East Asia region (China, Hong Kong and Japan). After identification of specific opportunities it will be possible to plan an International Marketing program. This involves selecting an appropriate launch strategy and developing a comprehensive Marketing Mix. It will also demonstrate how the identified strategy will be implemented and controlled.
3.0 Mission Statement and Corporate Strategy Guidance
In order to produce a meaningful International Marketing plan, the plan must be guided by the existing corporate strategy of Walkers. It is also necessary to consider the high-level strategy of PepsiCo, who would be assisting any expansion. Walkers has a responsibility to PepsiCos stakeholders, so must fully justify any expansion on the grounds of supporting existing strategy.
Walkers Snack Foods Mission –
Always the best for quality, freshness and taste
PepsiCo Mission –
To be the worlds premier Consumer Products Company focused on convenience foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.
3.1 Strategy Consideration
Within the context of Walkers existing mission statement, the company can internationalise the brand. However, Walkers must maintain high levels of product quality, freshness and taste in any market. PepsiCo has a strong growth focus, viewing market share as an important determinant of profitability. Walkers expansion into Asia would help PepsiCo to achieve market leader status in the East Asia market.
4.0 Market Choice
Walkers Snack Foods will adopt a market concentration strategy and launch part of its product range into East Asia, due to the growing snack food market and the popularity of Western snack companies products. East China has been selected as it is the region presenting the largest opportunity for Walkers, and also due to logistics and budgetary restraints it is impractical to distribute and promote throughout the whole of China. Adopting a diversification approach targeting other Asian countries would be too costly and the product would have to be adapted for each individual market due to cultural differences.
PepsiCo established itself throughout China in the 1990s, providing Walkers with access to experienced marketers in the region and possible future