Peanut Butter in Germany
Man cannot live by bread alone. He must have peanut butter.
In order to maximize profit, J. M. Smucker could increase sales of Jif peanut butter, its best selling product, into growing markets. Prior to any expansion a full analysis of the market is necessary. The country with the largest market potential for peanut butter in Europe is Germany. The country climate of Germany gives a positive outlook for peanut butter, the primary option being as a breakfast option in the bread spread category.
Daily patterns are malleable to suggest that peanut butter be a component, an additive, an ingredient, or a snack. Jif as a stand-alone brand is a U. S.-based product that has never, through company initiative, introduced any of their products internationally. Therefore there is no past experience in new market expansion. Jif has the branding business model. One main question is whether to copy the previous model for new entry (acquisition) or develop a new strategy that will better align with the targeted market. The target market for Jif in its home market of the US is families with children with the slogan “Choosy moms choose Jif. Based on the 360 degree profile of customer segments in Germany, the segments were evaluated on margin, persuasion, and volume potential. It was determined that the target market will also be families with children in Germany. Although the target market is the same, Jif will have a very different problem in Germany, getting users to switch to peanut butter instead of Nutella and recognizing alternative uses. In comparison, the primary marketing challenge in the U. S. is getting users to switch from another peanut butter brand to Jif.
The following report found multiple challenges of introducing Jif to a new market, including multiple points of resistance from the target market, such as: association of peanut butter with fatty American foods, current use is only as a bread spread, and entrenched competitors in the bread spread category such as Nutella and Ultje. Peanut butter is more nutritious than the leading bread spread. Peanut butter is high in monounsaturated fats, which actually reduce cholesterol. Peanut butter is also a good source of protein for vegetarians and vegans and is gluten-free and kosher.
Therefore, the points of resistance can be addressed by clearly communicating the nutritional benefits of peanut butter as well as alternative uses. Options for alternative uses of peanut butter include integrating peanut butter as an ingredient in cooking. The communication of alternative uses could be through recipes. The main competition is in substitutes. Although it is identified as a substitute rather than a direct competitor, Nutella, a chocolate hazelnut spread, will be Jif’s primary competition in the German market. Holding 17% of the market share, Nutella is the number one choice of bread spreads.
Peanut butter is currently not a large competitor in Germany in the bread spread category, as evidenced by its 1% market share. As a direct competitor, Ultje will present the most aggressive barriers to Jif’s entry. Ultje is a company that has been present for a long time, is locally based, and has a presence in the market due to its well-recognized cartoon figure, jingle, and celebrity endorsements. To combat both competitors the campaign should suggest peanut butter as a complement to the Nutella product. Selecting distributors and developing relationships with value chain members is also a challenge.
There are several wholesalers of peanut butter in Germany, which can be used to distribute peanut butter to retailers where consumers can then purchase the product. In conclusion, while the German market has high potential, it will be a difficult venture into Germany. If the decision is to enter the market some changes will need to be made, but the basic business branding model will remain the same as in the U. S. Jif will have to be keenly aware of how their brand – their marketing message, tagline, jingle, label packaging, etc. – is perceived in the German market.
Jif’s flagship creamy peanut butter spread was first introduced in 1958. Since 1981, Jif has been the leading peanut butter brand in the United States. As of 1998, Jif had an estimated 42. 5% of the market share, dwarfing closest competitor Skippy at 28. 8%. In 2002, The J. M. Smucker Company purchased the Jif brand from Proctor and Gamble. The purchase of the largest peanut butter brand in the U. S. by the famous jelly manufacturer was likely a strategic move to streamline distribution of the complementary products.
Peanut butter is sold primarily as a bread spread, and secondarily as an ingredient for other meals. The distribution of peanut butter is about 70% creamy to 30% crunchy (Kellogg). In 2005, peanut butter had a U. S. household penetration rate of 93%, with an even higher percentage in households with children. Jif has historically averaged near 40% of the market share (Kellogg). Business Model. Branding is very important to Jif, and their branding efforts have been consistent over the years.
Jif’s marketing program has been primarily family focused, with the popular tagline “Choosy Moms Choose Jif. ” Also notable is brand-building of the widely recognizable Jif label, with its striking vertical bars in basic red, blue, and green. As an instantly-recognizable brand, Jif has enjoyed long-term customer loyalty. Jif’s brand portfolio includes the core brand – the original creamy spread – along with newer varieties such as Extra Crunchy, Reduced Fat, Natural, Simply Jif, Jif Omega-3, Peanut Butter & Honey, as well as complementary products such as to-go miniature containers.
The stage of business development in this market is very mature, and the competitive landscape is quite saturated. As a result, Jif does not emphasize margins, as their price is set very competitively. Rather, Jif emphasizes increasing volume among existing customers in two ways. First, they encourage increasing the quantity of product purchased by offering multiple varieties. Cannot decide between creamy or crunchy, omega-3 or reduced fat? Try one of each! Secondly, they encourage increasing the volume of product purchased by creating new uses and purchase occasions.
Jif’s website is replete with recipes and serving suggestions, including an array of international dinners from Senegalese Beef Peanut Butter Stew to Mexican Chicken Peanut Mole. You can even sign up to have Jif recipes delivered to your Yahoo or Google page via RSS feed, downloaded to your iPod, or sent newsletter-style to your email. A final strategy to increase volume as well as exposure to the brand is an annual contest called the “Jif Most Creative Peanut Butter Sandwich Contest. ” The winner receives a $25,000 dollar scholarship fund. The event draws a multitude of families and local media (Jif website).
Target Market. Jif’s advertisements, tagline, and website clearly target mothers of young children. Jif’s label and homepage both boast an icon saying it is the “#1 Choice of Choosy Moms”, and the website includes a prominent link to a “Mom Advisor” page. Recently, Jif toyed with a more politically correct tagline, briefly updating it to “Choosy Moms, and Dads, Choose Jif”. In a comparison study with other leading brands, Jif’s consumers are clearly mothers or parents in the 35-44 year-old age range, and tend to be employed part-time in non-professional roles.
Notably, the primary indicator of peanut butter purchasing for all three of the top brands is having a household of 5 or more people. Having kids age 2-5 is the second strongest indicator for Jif (Marigny 221). “Marketers have historically targeted children and their mothers in product advertising, and even the names of the major brands are childlike—Jif, Peter Pan, Skippy”.
Jif creates value for their customers – the choosy moms segment – by assuring them that they are “America’s favorite peanut butter” because of their “fresh-roasted peanut taste. ” This proposition allows busy moms to know that their choice at the supermarket is an easy one; it doesn’t require a lot of time or effort, and they will be satisfied with their purchase time and again. Secondarily, since this segment values healthful meals and having family dinner together, value is also created by providing creative recipes via RSS feed or email as described earlier. Strategy, Marketing Program and Positioning.
Jif’s main competitors are Unilever’s Skippy and ConAgra’s Peter Pan, accounting for 60% of the category, plus a variety of private-label brands (Kellogg). Jif has several points-of-parity with their main competitors, namely in product attributes, price, and physical placement. All three companies offer similar varieties of peanut butter, similar sizes, and similar prices. They also have similar marketing techniques, mainly television ads featuring children shown during daytime programming. In the U. S., peanut butter is firmly positioned in supermarkets, accounting for 95% of sales.
Mass merchandisers (such as Costco and restaurant suppliers) make up another 4%. Peanut butters are almost always positioned on the shelf next to complementary products such as jelly and honey. The companies do maintain points-of-difference, however, mainly in their positioning as described below. Skippy, the #2 brand in the U. S., has traditionally positioned itself as the wholesome, healthful brand. Skippy has emphasized peanut butter’s high protein content more than the other brands, and has used celebrity endorsements such as former Mouseketeer Annette Funicello and athlete Derek Jeter.
Skippy claims to have less sugar than other brands, and in 1990 attempted to convince adults of the health benefits of peanut butter, using fresh vegetables and other foods in its advertising – which resulted in a dramatic decrease in market share. Since 1990 Skippy has repositioned itself as the “best testing peanut butter” (Kellogg). Today, Skippy’s website (with the enviable peanutbutter. com URL) is clearly kid-focused, with games, cartoons, and a “Kid’s Corner. ” Skippy is also the highest-price per oz brand of the three- they package in the smallest container size at 16. 3 ounces. Peter Pan is positioned as the low-price brand.
Advertising and information on their website is skimpy, and the company appears to prefer to “comfortably coast along in its third-place standing” (Gidman). In the past, Peter Pan has attempted to target kids, then adult non-users, and has also claimed to be “the best tasting peanut butter” (Kellogg). Peter Pan is the only brand in the top three to have been actually recalled by the FDA due to salmonella poisoning. Jif’s main point-of-difference from competitors is their obvious appeal to mothers as the target audience. As we have described, the tagline “Choosy Moms Choose Jif,” the company’s marketing efforts (recipes, contests, etc. , and the website are very much geared toward mothers with young children. After competing head-to-head throughout the 1980s and 1990s on which brand is the best-tasting, Jif has settled on a subtle yet specific difference: it has more of a “fresh roasted peanut taste. ” Jif is also the largest advertiser of the three, but doesn’t use consumer promotions as much as their competitors. Although Jif has been able to claim the #1 spot since 1981, it maintains a price point below Skippy. They have also taken a swipe at Skippy by pointing out the difference in product sizes on their label, “We’re Still 18 oz. Refer to Exhibit 2D for a product positioning map.
Company’s capability in entering new market. Jif as a stand-alone brand is a U. S. -based product that has never, through company initiative, introduced any of their products internationally. So taking their peanut butter to Germany will be a first time experience for Jif. Therefore, the only predictability we can use here is that of the mother company: The J. M. Smucker Company. From their history, Smucker’s has penetrated various food industries in Canada, mostly through acquisition. None of these acquisitions were peanut butter related.
So as they are preparing to enter Germany with one of their most popular brands, Jif peanut butter, the main question remains whether to copy the previous model for new entry (acquisition) or develop a new strategy that will better align with the targeted market. In order to assess the company’s capabilities in entering the German market with peanut butter, it is important to note that the Germans in their traditional cuisine do not use peanut butter. In Germany as in many other parts of the world, peanut butter is considered “an unpalatable American curiosity” (Kellogg).
With the emerging immigrant population in Germany, the use of peanut butter has slowly established itself over the years, although the growth rate since 2004 has remained relatively stagnant. But based on another study of the market in Europe, Germany has the largest potential market for peanut butter. One challenge in entering Germany for Smucker’s Jif is a general reluctance to use American products as they are seen as high in fat. However, based on the Cultural Navigator, Germans use facts and empirical data in the decision-making process and expert opinion plays a major role.
In this regard, Jif may be able to enter the German market by emphasizing facts such as the nutritional benefits of their product line. Identification of business model. Since there are some very specific points of resistance in the German consumers’ perception of peanut butter, Jif’s primary responsibility will be to build brand awareness and break the points of resistance with effective communication. Jif will have to be keenly aware of how their brand – their marketing message, tagline, jingle, label packaging, etc. – is perceived in the German market.
While some changes will need to be made to enter the German market, the basic business model will remain the same as in the U. S. for Jif. Core competency, activity management, innovation, and relationship management are also important to the company, but what they must absolutely positively get right is their branding. Controlling the largest domestic market share in the U. S. has enabled the company to guarantee some level of profitability through the years; not to mention their effort to always drive an increase in sales volume through programs that keep the Jif brand alive in the mind of their customers.
Looking at the German peanut butter market today, it is clear that the sales volume and values have slightly decreased since 2008. With volume potential as a main component in the profit impact equation, Jif in today’s German peanut butter market may have a hard time achieving market share and thus profitability. Therefore, increasing the overall nut-based market share (which increases the sales volume as well) will be necessary to ensure sustainable growth in that new market.
In considering Jif’s aggressiveness in attacking the U. S. market today, it will be a good tool for them in the German market where there is large potential to tap into the competitor’s market. Another avenue using the current market share may be to explore Blue Ocean that will result in lowering variable cost and may increase the sales volume; because considering increasing price to a market that is stagnant will only force the market to decrease.
The success of penetrating the German peanut butter market will be very much dependent on the marketing/advertising program that is associated with it.
Identification and 360-degree profile of customer segments. Segments of food consumption analyzed: young families with children, young families without children, seniors, young singles, restaurants, and hotels. Within the nut-based spreads subsector, the competitive landscape is not highly differentiated. Products have a similar price and position. In order to penetrate the market, however, Jif will need to consider the broader-based spreads sector, which includes peanut butters alongside Nutella, honeys, jams, etc.
As we have discussed, Jif will have to re-position peanut butter to be as useful in consumers’ minds as the better-selling spreads. Assessment of industry attractiveness and competitors’ strengths and weaknesses. The worldwide market potential of peanut butter in Germany is the largest in Europe. At the same time, sales and profits are declining. We attribute that to a lack of wide acceptance of the product, rather than being in the late-maturity stage of the product lifecycle. There are plenty of competitors in the nut-based spreads market, yet the market is not saturated. Of the competitors present, we believe Ultje will present the most aggressive barriers to Jif’s entry.
Ultje is a company that has been present for a long time, is locally-based, and has a presence in the market due to its well-recognized cartoon figure, jingle, and celebrity endorsements. A review of online opinion polls, blogs, expatriates and former German nationals now living in the U. S. shows that of the products available locally, such as Ultje, none taste quite the same as that good old-fashioned American peanut butter. We are tasked with bringing the American taste and texture, but not the American image, since German consumers have a general reluctance to use American products. Part of the marketing challenge will be to dispel the myth that peanut butter is fatty; being high in monounsaturated fat actually reduces cholesterol.
We will also need to remove the emphasis on being an American company and instead focus on creating a German image using local scenes and labeling. As we have learned, Germans use facts and empirical data in the decision making process, so we believe the right marketing and communication effort will succeed in overcoming these challenges. We believe the biggest competition will come from Ferrero’s Nutella, a chocolate-based spread or a “substitute” product, rather than other peanut butter spreads directly. Again, this indicates a lack of acceptance of peanut butter on its own merits – something Jif, with the right marketing plan, can correct.
It is important to select channel partners that provide value to the relationship, which can be done through devoting resources to marketing Jif or helping to create a competitive difference. It is important that the selected channel partners serve the target market and have an image consistent with the positioning of the company. There are several channels that could be used to get the product from Smucker’s to the end consumer. These possible channels are shown in the channel map below. The target market for Jif peanut butter shops in grocery stores, so in order to reach the target market, the channel selected should include a grocery store. Therefore, we can eliminate the first two channel options. Although the number of retail chains in Germany is increasing, there are still a vast number of independently grocery stores where the target market shops. Therefore, to improve efficiency in the value chain, a wholesaler could be used to distribute the Jif peanut butter to retailers who will then sell to the end consumer. However, the use of an agent may not be value added and does have a large additional cost.
Therefore, we should select option four with the potential of adding an agent between the retailer and consumer in the future if necessary. However, we must know which retailers serve the target consumers in order to select the proper wholesaler.
Evaluation of Potential Retailers
Retail chain stores in Germany that contain food products are: Real, Galleria Kaufhof, Kaufhaus, Aldi, and Schlecker. It is beneficial to partner with a retail chain as once a relationship is developed, the product will be supported in several locations whereas with individual retailers there would be many more relationships to maintain. All of these retail chains serve the target market. However, Schlecker and Aldi do not have an image consistent with the quality image of Jif.
Aldi is viewed as a discount chain and peanut butter is not a discount product. Schlecker is viewed as more of a drug store or convenience store and does not have a large variety of products, which is not consistent with the image of Jif.
Evaluation of Potential Wholesalers
There are 14 wholesalers of peanut butter currently in Germany. Wholesalers must be analyzed to determine who would provide the most value to the partnership, such as devoting resources to marketing peanut butter, a network to distribute across the country, supplier of target retailers defined above: Real, Galleria Kaufhof, and Kaufhaus in order to reach the target market.
Several wholesalers can be eliminated from the list as they are more diversified and the focus should be on those with a peanut butter expertise.
Country Climate Analysis
Profiling the environment is critical to marketing success. Germany is a country of 82. 3 million inhabitants of which 74% are urban dwellers. There are two primary trends affecting the population. The fertility remains well below the replacement ratio and net immigration is low…the population is ageing rapidly as a result of greater longevity and low fertility rates. ” While the percentage of females to males, in the ‘productive age range of 15-64 years old is 66% to 34%,’ with an overall low replacement rate there are fewer women opting to have children. This will affect our long-term prospects of marketing peanut butter to mothers and children. As Germany has a negative population replacement rate there are less anticipated children to enter into and support our target market. We analyzed the opposite extreme of the prospectus, that the ageing population could potentially be a target market.
The ratio of elderly population (>65 years of age) to the working-age population (20-64 years of age) is forecast to increase substantially from 32% in 2005 to 62% in 2050. ” Peanut butter could easily be integrated as an easily accessible, low cost, high-protein option for seniors; however, we found their margin potential measured low and declining, very unattractive. Economy & Politics. As the “world’s third largest economy…” Germany has emerged as a stable environment for business, both economically and politically. “The European Commission forecasts that the German economy will remain in positive territory for the coming months but that it will barely grow in the fourth quarter of 2009 at 0. 1% after expanding an anticipated 0% in the third quarter (PRS Group). ”This suggests continued stability and growth, albeit contracted, for the upcoming years. This works as an advantage for peanut butter positioning as a wholesome product, at a lower cost. Introducing the product now can position peanut butter for the economic rebound. If families become accustomed to integrating peanut butter now it will continue to transition as a diet component when their income allocation changes. Politically, “Germany is a stable democracy organized on federal lines”. The democratic political infrastructure scored “Germany 13th in the Economist Intelligence Unit’s 2006 democracy index.
It scores highly in terms of electoral process and civil liberties, fairly high in terms of political culture and government functioning (the latter including accountability and absence of corruption… and little political risk. It is not anticipated that issues of nationalization or high repatriation percentages will play any role in disrupting the distribution – nor revenues – of peanut butter. Although the strong economy and stable political system will not contribute risk factors Germany has “…what is currently one of the most complex tax codes in the world (PRS Group). ” Recent changes will affect supply chain costs and total purchase costs. For example, “a 3-percentage-point increase in value-added tax (VAT) was added in 2007”. This affects the purchase price and may deter consumers.
Other taxes will play a role in the consumer’s decision making. Most of our target market is from the middle class who has income taxes at top of mind – rightfully so as taxes subtract a large portion of disposable income. “The overall top income tax rate is now 47. 5% (EIU 20). ” Although most families will not face as extreme a rate the income distribution, after tax, should be considered in pricing the product. Additionally, while overall corporate taxes have decreased they remain extremely high. “From 2008 the headline rate of corporation tax was cut from 25% to 15%, reducing the combined rates of corporation tax, local trade tax, and the Solidarity Tax from 38. 65% to 29. 8% (EIU 20). This could serve as the replacement to any currency risk or otherwise with repatriation taxes.
Implementing marketing campaigns requires knowledge of how consumers receive messages. Since 1995 Germany has had a strong history of media communication and availability via television with 373 stations (CIA World Fact Book). The birth of the Internet provided faster delivery of information and availability to the 61. 97 million Internet users, ranking it as the 6th most connected country in the world (as of 2008, CIA World Fact Book). Having strong TV, and Internet availability ensures a range of publicity options and flexibility in reaching our target market.
However, one potentially costly issue for a nationwide media presence is the “limited amount of advertising carried by public radio and television companies, which operate under the supervision of the authorities of the individual states (EIU 9). ” Not only is advertising limited, it is fractured amongst the states. Contracts would need to be negotiated within each of the 16 states. Social/Cultural. The most critical environmental factors revolve around the family and its social structure. “The family is still the first and most important social group of people and one of the most significant social institutions (Hintereder). ” Women play the most essential role in the structure. While women continue in a traditional role responsibilities are changing within the classes.
Currently, they face the main obstacle in career advancement of the “fact that the network of childcare facilities particularly for small infants is not so good on a European comparison… women, even those in employment, invest twice as much time looking after children as men. To date it was almost exclusively women who have taken parental leave (Hintereder). ” This supports marketing to moms and their young children. Moms select the products in their household pantry and mold the taste likes and dislikes of their children. As the employment of women increases (either full-time working moms or part-time), “now at 64 percent,” peanut butter can play a likewise increasing role (Hintereder).
Instead of only “Choosy Moms,” the marketing campaign can also publicize for “Busy Moms. ” Yet, working mothers alter the size of families and can decrease demand. “Families have become smaller…single-child families [and] two-child families are typical. Almost one third of women born in 1965 still have no children today. As the social institution ebbs and flows marketing peanut butter will likewise have to ebb and flow.
Food & Daily Life
After understanding the family structure the next most key element assesses diet, nutrition, and food patterns. “Most Germans acquire food from both supermarkets and specialty shops, such as bakeries and butcher shops (Every Culture). Staple daily food items include bread, cheese, pork, vegetables (mostly starches and root, CIA World Fact Book). Many meals are accompanied by beer. While the previous data in this report noted Germans appreciating a nutritious approach to their diet many of their staple items are carbohydrate based. This supports eating a heavier, more substance based product like peanut butter. The German meal pattern suggests positive angles for where to insert peanut butter into daily life. A primary option could be at breakfast to accompany bread and the afternoon Kaffee. “Bread is the main food at both breakfast and supper. The warm meal of the day is still often eaten at noon, though modern work routines seem to encourage assimilation to American patterns.
Large family meals are still common at noontime on Saturdays and Sundays. These are often followed in mid-afternoon by Kaffee und Kuchen, the German version of tea time (Every Culture). ” The meals identify which daily patterns are malleable in how to suggest peanut butter be a component, an additive, an ingredient, or snack. Hotels in Germany typically include breakfast. It is very common to find small packages of Nutella provided in hotels for breakfast. Jif currently has an “on the go” packaging currently in place, a 2. 25 oz container, which could be used to directly compete with small packets of Nutella.
Recommended Marketing Objectives and Strategy Marketing objective
Within 12 months, Jif will increase volume of peanut butter purchases among all consumer categories by providing a healthful, low-cost, convenient staple item which belongs in every kitchen pantry.
- Time period: There are several points of resistance to enter the German market. Enough time should be taken for Jif to be able to create awareness and change consumer attitudes, but we will recommend a time period of 12 months to evaluate success.
- Profit impact: By increasing awareness of peanut butter’s benefits across all consumer categories, volume will be increased both in the number of containers purchased, and the purchase occasion itself.
- Target market: All consumer categories have a need for peanut butter in their pantry. Whether young or old, peanut butter makes an excellent bread spread for breakfast or lunch; an easy snack item; a delicious ingredient in baked goods and ethnic meals; a fuel recharger for hikers; a protein substitute for vegetarians, vegans, and those with dental problems; a gluten-free product for those with wheat allergies; a kosher product; a delicious and filling product for those on a low-carbohydrate diet such as Atkins, South Beach, Zone, etc; the list goes on!
- Value proposition: From the customer’s perspective, peanut butter adds value because it is healthful, convenient, long-lived, inexpensive, and versatile. Very few consumer products can claim all those benefits! Marketing strategy and proposed positioning.
Jif is an essential pantry product for all consumers among all staple food products because it is the only truly healthful, low-cost, convenient, delicious, and versatile product available on the market. Jif’s offerings are different from competitors in the following ways:
- It is much more healthful than Nutella, which is presumed to be healthful but is actually is high in added sugar and fats.
- It is much more versatile than Nutella, which is marketed as solely a bread spread.
- It is much more convenient than the natural peanut butters already available in Germany, which are not as long-lasting, must be refrigerated, must be brought to room temperature and stirred before useful as a spread.
- It is different from existing spreadable peanut butters available in Germany because it will be aggressively marketed as a quality, low-cost global brand with a million uses. Other competitors position it as bread spread only. Branding objective.
Because of the points of resistance for German consumers, namely an unfavorable image of the product and country-of-origin, as well as a lack of awareness of the versatility of the product, the communication regarding the product will have to be changed quite significantly from the U. S. program. However, the product itself will remain the same, which will generate significant scale advantages. Our branding strategy then will be a combination of product extension and communication adaptation. The brand will need to portray that it is a sophisticated global product, yet de-emphasize its American roots. This is necessary due to the perception of the German consumer that American products are fattening.
Marketing Mix Program Product
Since we have identified a German perception of peanut butter as unhealthful, we need to combat that belief by marketing the peanut butter types that are more wholesome. Out of the Jif product line, we will take Creamy and Chunky have been the quintessential best-sellers. The smaller sizes would be introduced first, which is 18 oz. To compete with small packages of Nutella served in many restaurants and hotels for breakfast, the “Jif To Go” packages should also be introduced, which are 2. 25 oz cups. Ideally, Jif should have multiple product lines and sizes in Germany so that multiple facings of its containers will be seen on grocery store shelves.
This repetition of name and pattern on the shelf will help to increase brand familiarity. However, the rest of the Jif product line will be withheld initially while the consumer is acclimated to the two main peanut butter choices. The other product lines such as Jif with honey, and Jif Omega-3 may be introduced later in small quantities; possibly as a consumer preference test. As peanut butter sales grow in Germany, Jif can plan to grandstand new product line introductions as well as the larger size containers, such as the 40 oz size. These campaigns will serve to reinforce peanut butter in the consumers mind, and entice consumers to try the hottest new flavor from Jif. Personal service.
Jif will create and maintain a localized website for the German market, with an easy-to-remember URL which will be displayed prominently on all advertising. The website will be customer-focused, with clearly labeled sections for nutrition information, recipes, types of products, store locator, an FAQ section, a “contact us” link for questions or comments, and a money-back guarantee for customer satisfaction. The website should be functional yet elegant, as the Ferrero website is today. Each customer segment should be represented (a page specifically for kids, moms, vegetarians, etc. ) showing the benefits that peanut butter provides for them specifically. This will enable vegetarians doing a Google search in Germany to find a hit on the Jif website, for example. Price.
Jif should be particularly cautious about pricing in Germany. The price should be maintained at an affordable level to spur consumer interest as a snack food, but not so low as to have unwanted perceptions of low-quality or that the product may be close to expiration. Any price reductions should be limited to sales with widespread advertising attached to gain customer awareness. The normal pricing level should be set very near to the level of Nutella, and with margins similar to that of the U. S. Comfortable margins should help the marketing team to convince grocers to provide superior shelving locations and multiple facings. Current peanut butter pricing is around 3-4 EU.
Smaller containers are prevalent in Germany; therefore Jif will have a higher fixed cost due to the packaging. Price per gram will likely be higher than the Jif pricing in the U. S. to cover these costs. In Germany, we anticipate a similar price as the U. S., only for a smaller container.
Jif should strive to get the best shelving possible initially, to get large consumer attention. End caps of isles, and free product tasting tables should be used. At the tasting tables, peanut butter should be served on fresh bread as we anticipate the product will be used that way most. In addition, the service should contain other healthful ways of eating peanut butter, such as in a celery stock. All parts of the presentation should be arefully considered to create the perception of healthfulness. The placement should be put together to appeal to mothers, and to be highly attractive to kids in the cart as well.
Promotion or Communication
Our number one goal is to increase awareness of the Jif product. Peanut butter has such a low penetration in the spreads market in Germany today; consumers just don’t consider the product as a necessary item in their pantry. Therefore, we recommend a startling, attention-grabbing promotion that runs via internet and television commercials for a short period, perhaps 30 days. The idea is to generate attention with ad that has the potential to generate excitement.
After creating a buzz and an interest in the product, our next objective is to clearly communicate the benefits of peanut butter, including communication on the nutritional benefits, quality processing, and alternative uses. The advertisements will be done via television, internet and print ads that all show images of the various ways that peanut butter is enjoyed. Until a spoken segment at the end of the television or internet commercial, the images in the ads are displayed wordless. On television, the absence of words is an attention-grabber itself. Viewers who have “tuned out” during the commercial break may think their TV has stopped working, or their regular programming has resumed. If we can capture their attention and then hold it through a series of captivating images, we will have succeeded in creating awareness.
Another benefit of the simple image campaign is that it can be easily reinforced in the product’s website and print ads such as magazines, billboards, newspaper coupons, mailers, etc. , by using the same images, thus tying the whole theme together. The website, which is clearly communicated in all advertisements, will prominently display the nutritional benefits, recipe ideas, and a store locator, as well as repeating the branding from the ad campaign. There are numerous examples of images that could be used. There’s the hiker who needs to refuel and pulls out a tube of peanut butter; the kid opening his lunchbox at school with a heart-shaped peanut butter sandwich from Mom, or making one for himself as an after-school snack; the hip cocktail party eaturing celery sticks and peanut sauce; the vegetarian (wearing an “I heart animals” sticker to show she’s vegetarian) getting her protein fix; the kosher individual; the dieter; the German immigrants enjoying peanut sauce in a Thai dish, and mole in a Mexican dish; and finally, getting back to the roots of when the product was created, there’s the old toothless man with a huge smile, eating peanut butter right out of the jar. At the end of the series of images, again the Jif jar is superimposed with the tagline (translated into German): “Peanut Butter: It’s more than you think. ” The images are wordless, except at the very end when the tagline and a brief list of the nutritive benefits are spoken.
The benefits include that the product is high in protein and monounsaturated fat which is good for your cholesterol, low in saturated fat and sugar, high in dietary fiber and other vitamins. Peanut butter is vegan, low-carbohydrate, gluten-free and kosher. Another popular promotion in the U. S. was a recipe contest in using Jif as an ingredient with a financial prize. This could be replicated in Germany. It should be noted that all advertising campaigns will require partnering with a local firm to choose the right wording, and to make sure that none of our taglines or acronyms could be misused in a non-flattering way. Professional Sales force. The sales force will be tasked first and foremost with getting entry to German grocery stores and getting the premium shelving during the peanut butter “awakening campaign. The sales force should be tasked with stocking the shelves, and working the free product testing tables. Peanut butter is not a discount product and the expert German salespeople should be therefore groomed to present the desired company image of quality. The Jif sales force will be tasked to develop recipes for caterers and restaurants, and to provide comprehensive sampling and product use education to chefs. Award winning chefs and restaurants may be compensated to develop German dishes using peanut butter. Jif may sponsor cookbook authors that include recipes with Jif. The sales force should exhaust all avenues to increase German familiarity with peanut butter.
External Analysis: Opportunities
The country with the largest market potential for peanut butter in Europe is Germany. Peanuts and peanut flavoring are already present and popular in Germany, such as in Thai Cuisine or the popular snack Erdnuss Flips. Therefore Germany can be looked at as a strong potential peanut butter target market. Peanut butter is more nutritious than the leading bread spread as it is high in monounsaturated fats, which actually reduce cholesterol. Peanut butter is also a good source of protein for vegetarians and vegans. Germany is a member of the European Union which will allow Jif to easily extend their target market to other parts of Europe as long term growth strategy.
The infrastructure is also well advanced to facilitate the transportation of products from initial manufacturing plants to various distribution locations or for the easy transportations of required suppliers.
External Analysis: Threats
With all the above mentioned opportunities, there are some challenges that Jif is called to highlight and be aware of in other to successfully execute in the German environment. There is the threat of a salmonella outbreak which would create a scare of consumers. One key element is the fact that Germans view American food as being high in fat. Jif being an American brand could pose a threat to the overall strategy if not well presented and the nutritional benefits presented.
Also there is an existing peanut butter company that happens to be more local than Jif when starting, and it will require that Jif differentiate itself to the customer based as a way to establish their brand in that market. Going after Nutella could be challenging as they are well positioned internationally and in Germany; their brand is established and well known. Therefore, marketing Jif will require investment in time and energy to compete. Overall, the spread market in Germany is very limited therefore requires that Jif not only tap into the existing market but also strategize to increase it using non peanut butter company spread customer base.
Particularly, they need to focus on stealing Nutella’s market share. Doing business at the international level will also raise other challenges that Jif will need to deal with such as hedging of the currency, the legal requirements of the host country (Germany) vs. that of the mother country (USA); The company will have to opt for one way of presenting their financial statement, that may need to be converted into the mother currency with all the possible implications that comes with reporting their final profit at the end of each financial year. Jif also been a new product with Germany as their first international base, has no recognized trademark internationally.
Internal Analysis: Strengths
The strengths of Jif when compared to substitute products is its nutritional benefits and versatility, when compared to direct industry rivals in peanut butter is convenience. Jif’s main point of difference from competitors is their obvious appeal to mothers as the target market with their focus on the nutritional benefits of peanut butter, in the established market in the U. S. and also in Germany. Jif has a strength in advertising nutritional benefits in their home market, which is experience that could be used in Germany as well. Jif peanut butter is not only more nutritious than the leading bread spread, but it is also more versatile.
Jif can create an internal strength by providing many recipes that demonstrate uses of peanut butter as more than a bread spread. In Germany, many of the peanut butter brands currently available are organic, or natural, peanut butter. Organic peanut butter is less convenient as it must be refrigerated, brought to room temperature, and then stirred prior to being used as a bread spread. Whereas Jif is shelf-stable. In Germany, the refrigerators are much smaller than American refrigerators and the space must be used sparingly. Another convenience factor for hotels is that Jif already has an “on the go” packaging currently in place, a 2. 25 oz container, which could be used to directly compete with small packets of Nutella.
Internal Analysis: Weaknesses
Although this program has done a great deal in addressing the gap and defining a differentiation positioning as they enter the German market, there are still few elements that remains uncertain as for their impact to the outcome. The relationship with the wholesalers and retailers cannot quite be predicted. But it is important to focus in building it right from the beginning to ensure the sustainability of the business in the long term. We need to note that Jif strategy is coming from a competitive disadvantage to current competitors as most of them have been operating in that ground for many years and had grown to establish their brand in that market.
There is also the fact that this whole program’s growth depend on the fact that Jif will be able to turn over the population’s old eating habit to more include peanut butter. Although well elaborated, there is no guarantee that this campaign will be successful in increasing the target market of spread in general and that of peanut butter in particular.
Conclusion and Recommendation
Considering the above analysis, there is great potential for sales of Jif peanut butter in Germany. To overcome points of resistance, a focus would need to be placed on the communication of nutritional benefits and alternative uses. One of the main challenges is selecting wholesalers to work with and developing relationships with wholesalers and retailers.
In developing the Jif brand, a lot will be invested monetarily, and may not see clear signs that this market may increase for many months. The program that has been proposed requires massive spending. Therefore, Jif in Germany does not seem to be profitable in the short term but could be a great success in the long run; if successful in turning people’s behavior.