EXPORTING JIF PEANUT BUTTER TO CHILE

EXPORTING PEANUT BUTTER TO CHILETeam 2: Claudia Icochea, Melissa Gunther, Rebecca Wall and Stefanie Wilfong

The containers of peanut butter in two presentations will be the first in a plastic jar (similar to a tomato sauce jar) in a pack of 500 grams. This product presentation will be in a plastic cup which will have a label with the product name, barcode, label it will further product information, necessary for consumers.

The company is engaged in the production and marketing of Jif Peanut Butter, giving customers a product of excellent quality with a high nutrient content at an affordable price, providing the satisfaction of all consumer needs.

Product featuresMISSIONProducts commercialized in Chile must be labelled with:

The name or registered brandThe address of the producer or importerThe country of originCare instructions

Information must be provided in Spanish.

If product has a high percentage of sodium, it must be shown in the label by law. LABELING

Advertising, which is any paid form of non-personal presentation and promotion of ideas, goods, or services by a well-defined sponsor.

The American influence in Chile will help expand the knowledge of peanut butter, even if Jif itself is not a well-known brand in that country.

Walmart Chile - Walmart Chile operates several formats including hypermarkets, supermarkets, and Ekono convenience stores.

PROMOTION STRATEGY

Goal for Jif Peanut Butter within One Year

Launch a new product into the Chile marketGain market share and control most of the market - limited competition in Chile with peanut butterNew product will be designed to accommodate the local tastes of the Chilean cultureAppeal to consumers as a desirable and affordable productEveryday staple item for customers to enjoy as a new healthy option in every household as well as businesses and restaurantsEstablish customer loyalty and brand recognitionMARKETING OBJECTIVENational e-commerce will exceed two billion dollars, with annual rates growth from 20% to 30%.

The popular online purchases include electronics, tickets to concerts or events, and plane tickets.

Most popular internet sites:Lan.com (popular airline)Fallabella (retail store)Mercado Libre (equivalent to Ebay). Coupon shopping:Groupon, CuponaticLets BonusAgrupemonos.

E-COMMERCEUSERS

In Latin America, the background described shows the existence of gaps in Internet use at both gender groups and even intensify in rural areas, or by level of education or income.UM Chile stated, In 2012, only 3% of Chileans used mobile devices for e-commerce and only 70% of the population owned a computer

AGE GROUP:

In Latin America the highest percentage of the population, 32.5%, is concentrated in people between 15-24 years of age. In Chiles case, this age group actually represents 39.8% of the countrys population, while only 24.7% is between 25-34 years old.

MARKETING ENVIRONMENTJif must consider the external factors that the Company will be facing and, will then need to take a passive approach when entering the Chilean market by adapting their product to meet the needs of the consumer. Micro-environment

It is imperative that Jif hires and trains a strong international sales team to build long term relationships with the retail stores that will be selling their product in Chile.JIF should consider engaging in co-branding with grocery stores currently in Chile. Jif needs focus marketing efforts not only on inducing consumer trial of peanut butter, but also on creating brand recognition to keep their specific product in high demand at retail stores.

Macro- Environment

Social Factors

The large amount of potential consumers presents a huge opportunity for Jif if the Company chooses to enter this market. More than 17.8 million people live in Chile, which makes it home to over .25% of all of the Worlds peoples.

Economic FactorsAs reported by Euromonitor, there has been an increase in the amount of disposable income for Chilean consumers.As the economy continues to increase, retailers in Chile are eager to diversify the range of products that they have available for the consumer to purchase. The convenience and grocery stores in Chile are looking to satisfy upscale consumer demand for diversification and, the highest demand is for snack foods and on-the-go items.

Legal and Trade Factors Chile has a relaxed import policy with lose international trade restrictions, encouraging goods to be imported and traded openly.

Relatively easy market to enter as there are currently no import quota limits, pre-shipment inspection laws, or strict licensing regulations.

Companies that import goods to Chile and net over five million dollars in a financial year must share financial information to the Central Bank of Chile, but there are not any limits on the amount of currency that can actually be taken out of the country.

While importers are not limited by strict registration rules, Chile does require each company importing items to staff a customs broker who is responsible for entering the product if the resale value is over $500 US dollars.

Directly export Jif peanut butter that is appealing to the local tastes of Chile

Benefits of Exporting to Chile

Minimal risk - Does not require Jif to invest and commit to purchasing a production facilityCapitalize on the open trade agreements between Chile and the United StatesQuick market entry Gain higher long-term profitsStronger relationships with Chilean buyers More control over the exporting processMARKET ENTRY STRATEGYCOMPETITIVE MARKET ANALYSIS Challenges and Threats of Entering the Chilean Market

It is vital that Jif works to build brand recognition throughout Chile, so that if similar competitors chose to follow Jif to Chile, Jif will already have a connection with the consumer to help them maintain market share.

Jif must work hard to differentiate their product from other comparable items by creating a strong marketing campaign and advertising the unique product attributes of the peanut butter.

However, Jif should also consider using price differential strategy to compete in the open Chilean market by altering their profit margins to remain competitive with pricing. Threat of Substitute Products

Currently, the only direct substitute product for Jif peanut butter in Chile is the generic or store brand peanut butter that is offered in grocery stores and the Chilean Walmart.

Jif should brand their peanut butter by marketing the product as having superior quality and promoting the health benefits of Jif, as compared to substitute products, thereby justifying a higher price.

The competition should not only be defined by other nut butters, but also by all alternative companies who distribute sauces, jams, and butters. TARGET CONSUMER MARKET AND PURCHASING BEHAVIORAs Reported by Euromonitor, the Chilean consumers are purchasing over fourteen billion dollars of packaged foods that are currently being imported from other countries, including the United States. The majority of Chilean consumers have recently seen an increase in salaries and in disposable income, encouraging grocery retailers to diversify their products to include luxury items and introduce new products. The Chilean consumer is now more aware of potential health issues caused by poor eating habits such as obesity, high blood pressure, and diabetesChileans are not used to the sweetness of peanut butter, so it is important that Jif alter the recipe of their product to decrease the sweetness and adjust to the taste of the Chilean consumer Establish and organize an international department within JifManagers will report to the Jif sales and marketing teamInternational department is to be well equipped with practical knowledge of the Chilean cultureCommitted to extensive research of the country and culture to develop a confident product and marketing strategyMust speak SpanishOvercome the language barrier Ensure communication is clear and understandable, especially when conducting business

Price is a very important factor due to the open and competitive climate in the Chilean market.Companies that choose to import their products into Chile must be as competitive as possible with price, and adjust their margins in order to compete and gain market shareOption of switching focus from price to added value by differentiating the product from all other available substitutionsJif would need to connect with the customer that they are serving to justify the higher priceover 25% of the Chilean population is obese and they are willing to pay more money for healthier substitutions that are more natural and will contribute to their overall health and well-being according to the Organization for Economic Co-Operation and DevelopmentThe average Chilean is working much longer hours. They are willing to pay a premium for healthy pre-packaged food items that can be easily consumed on-the-goFor an 18oz. jar, just about 500 grams, Jif should charge about 1,680 CLP, which is in line with the current price in the U.S. GLOBAL PRICING &PRICING DECISION

Before the product is authorized to be put on the market, Jif must follow the protocol of the country and receive approval from the Chilean health authorities to receive a registration number and open sales permitJif international department to develop business relationships within Chile for access to buyersTrade and service activities most commonly managed at the capital, Santiago.

Best channel for Jif to use is the seaports as 97% of exports in Chile go through this successful methodOnce product is exported, ground transportation will be coordinated to distribute the product to supermarkets, markets, convenience stores and businesses around the country.Jif distribution will concentrate on business to consumer and business to business strategies.

CHANNELS OF DISTRIBUTIONProduct distributed to supermarkets, markets, convenience stores and businesses around the countryJif will distribute to the leading supermarkets and hypermarkets in Chile such as Wal-Mart Chile, Cencosud, Unimarc and TottusBy entering the market with well-known supermarkets, the product will be marketed effectively and offered on a favorable scaleSales in supermarkets and hypermarkets reached $17.9 billion in 2013 accounting for 62% of the market's overall value With the recent rise in disposable income of Chilean consumers, a wide variety of products are now being offered in grocery retailersAs peanut butter produced by the United States is rare in Chile, the recent purchasing trends of consumers support the market entry of Jif peanut butter in grocery retailers all around the foreign countryIn addition to supermarkets, Jif will provide this product to businesses, restaurants and specialty shops to further penetrate the market and develop prosperous partnerships.

..Overview

Originally, it was closely linked to supporting social organization and community initiativesToday, there is a broader connectionaddress societies concerns with regard to sustainability of companies operations and its impact on the environment and communities wellbeingTransparency and accountability are increasingly importantEvery leading company is required to publish a sustainability reportJ.M. Smucker already satisfies this requirement

Corporate Social Responsibility (CSR)

CSR - Concern for the use of Palm Oil Increased awareness of the detrimental effects on the rainforest from palm oil plantationsThe size of palm oil plantations is estimated to double in Chiles neighboring country, BrazilCould be very detrimental to Jif if the Chilean people decide to boycott due to Jifs use of palm oil Currently palm oil is in all of the natural spreads including Creamy, Creamy Honey, Crunchy, and Crunchy Honey To mitigate this issue, Jif needs to start testing the use of alternativesYeast is the most viable option

CSR - Concern for materials used in packagingTwo types of containers will be used Large jars and small cups both made with TEP plasticRecycling has been gaining support in recent years starting with a bill proposed by President Sebastin PieraCompanies will be in charge not only of design, production and commercialization of their products, they will also have to take responsibility for the end of life of these products. (The Santiago Times)Coca-Cola Chile, Nestle, PepsiCo, Walmart Chile, and Unilever have signed on to support a new recycling network in Chile will accept about 20 different materials, including glass, PET plastic, aluminum, paper, cardboard, and textiles (Mazzoni)To take advantage of these recycling centers, Jif should use PET plastic for its containers

,,,BUDGET SUMMARY COUPON EXPENSES

Jif should offer coupons using three avenues, email, text messaging, and the Jif website250,000 email coupons per monthAssumes $75 per month per 1,000 messages Total annual cost of $225,000500,000 text message coupons per month$.05 per message Total annual cost of $300,000Jif WebsiteOne time cost of as little as $500 assuming little to no maintenance is needed.A total of at least 9,000,000 coupons will be released the first year Reports to Purchase

Peanut Butter Industry ReportProvided by IBIS World for $925Contains key industry statistics, market size, industry trends, and growth and profit forecasts for a 5-year outlook period Chile Country ReportProvided by The PRS Group for $325, but extra charges are incurred for multi-user accessexpertly assesses potential political, financial, and economic risks to business investments and tradePackaged Food in Chile ReportProvided by Euromonitor International includes analysis of key supply-side and demand trends and detailed segmentation of international and local products U.S. CHILE FTA

Free Trade Agreement took effect on January 1, 2004Majority of tariffs were eliminated immediately, with the remaining ones being phased out over the next 12 yearsJif would only be privileged to this agreement if it could prove that the good is wholly obtained or produced in the territory of Chile or the U.S. Current problem if the cost of the palm oil, peanuts, or other products, sourced from other countries, exceeds 10 percent of the adjusted value of the peanut butterIf Jifs products do not meet these requirements, they would be subject to the following: 19% value added tax6% duty TaxImport License requirement Other expenses deemed necessary by Chilean Customs Chilean Taxes on Income

Based on the U.S. peanut butter sales in 2014 of approximately $1.2 billion, Jif can expect Chilean sales to be approximately $33 million in the first year.The population of Chile is about 5.5% of the United States, meaning that if peanut butter sold at the same rapid state, Chilean sales would be about $65 millionTo account for the fact that peanut butter is not a staple product for the Chilean people, this sales estimate was cut in halfIf the market accepts or rejects this product more quickly, sales would fluctuateChile has a favorable corporate tax rate of 25%, compared to 40% in the United States (KPMG)Based on the sales estimate of `$33 million, Jif would pay taxes of ~$8.2 million the first yearSOURCESAftermarketer Club. (201, January 26). How to Start Engaging in Coupon Marketing. Retrieved from http://aftermarketerclub.com/blog/2011/01/how-to-start-engaging-in-coupon-marketing/Balch, O. (2015, February 17). Scientists reveal revolutionary palm oil alternative: yeast. 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