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International Marketing Strategy Project:
Country Market Analysis
India
Skippy in the U.S.
• Positioning:
– Family oriented
– Nutritious alternative
– Fun for kids
• new packaging and snack bars
• Target market: Families with young children
• Distribution: sold to grocery chains, convenient
stores, and mass retailers from one central
manufacturer
Implications for Skippy in India
• Will consumers like the taste or will it have to
be altered?
• Will consumers be able to afford the product
and what price must it sell at to be successful?
• Where will consumers buy the product and
how will the product get to the selling
locations?
• How will consumers find out about Skippy and
how will ads have to be changed?
Agenda
• Would it work in India?
• 4Ps
– Price: Retail Price
– Place: Production, Distribution,
Warehousing, Retailers
– Product: Ingredients, Packaging
– Promotion: Types, Message
Price: Retail Price
• In U.S., avg. price of 18 oz. jar: $2.50
– In India, that would be about 114 rupees
• But in 2002, a bottle of soda cost 10 rupees,
about $0.22.
• Economic factors
– Top 20% of households have income of $2800 /
year or greater
• About 128,000 rupees
– Top 2% (20 million) have income of $13,000 / year
• About 594,000 rupees
Price: Retail Price
• Legal Factors
– Tariffs can reach up to 25%
• Cultural Factors
– Bartering / Negotiating can lower prices
• Overall, price must be lower in India than
in U.S.
Place: Production
• Currently, Skippy only produces its products out of
Little Rock, Arkansas
– For both domestic and international sales
– Product must be held for 24 hrs. to settle before being
sent to one of Unilever’s 7 distribution centers in the
U.S. and 19 countries as well
Place: Production
• Legal Factors for shipping from U.S.
– Very few quantitative regulations
– Tariffs up to 25% on imports (but India
continuing to decrease tariffs to meet WTO
guidelines)
– Avg. tariffs on U.S. companies: 15%
– U.S. and India not part of any multinational
trade agreement
– No licensing fee for food items
Place: Production
• Cultural Factors
– Indians favor use of local labor and joint
ventures
• Technology Factors
– Unilever already has the facilities to produce
in India if they so choose
Place: Production
• Infrastructure Factors
– Hindustan Lever Ltd., Indian subsidiary of
Unilever already has 100 factories and
research facilities in India (Also one of the
largest and most respected companies in
India)
– Unilever already produces products like
Lipton Iced tea there
Place: Production
• Economic Factors
– State to state tariffs if produced in India
– Cheaper labor in India
Note: These
folks are not
making peanut
butter
Place: Distribution
• Transportation
– Infrastructure Factors
• Developing new national 4-lane highway
system
• Only 58,000km (36,039 miles) of road usable
for high speed traffic
– 3,000,000km of road with only half paved
• 232 paved airports but only 10 are profitable
• Rail very expensive to move product because
of high tariffs
– 63,000km of rail with new system in development
• Outdated sea ports
Place: Distribution
• Transportation Examples
Place: Warehousing
• Technology Factors
• Hindustan Lever, Ltd. Uses JIT system called RSNet,
internet-based network to connect warehouses and
manufacturers
• Infrastructure Factors
– Mother Depots: warehouses that stock
manufactured goods to be sold in given region
• Stocked weekly or bi-weekly
– Single channel distribution plants for rural areas
• Villagers come to plants to pick up goods
Place: Retailers
• Currently in the U.S., Skippy is available in
most groceries stores, convenient stores, and
mass retailers
• Infrastructure Factors
– 12,000,000 retailers, very few national chains
– Mostly mom and pop stores
• Retail outlets almost always locally owned
– Large groceries targeted to ex-patriots and upperclass Indians
– Most cities have well-known market districts
– Although many villages have satellite TV, getting
product to rural markets can be huge challenge
Place: Retailers
Place: Retailers
• Competition Factors
– Planters peanut butter and an Australian
brand sold in India
– Chutney, used as a spread, may be a
possible competition
• Skippy could possibly copy positioning in retail
markets
vs.
Product: Ingredients
• Currently in U.S.…
– Skippy has 6 flavors of peanut butter as well as
snack bars and squeeze sticks
– In U.S., peanut butter must have 90% peanuts
• India second largest exporter of peanuts in
the world (Skippy gets most of its peanuts in
the U.S.)
– 24.5% of world production
• Legal Factors
– Imported and domestic food products must be
subjected to provisions of India’s Food
Adulteration Acts
– Copies of act can be obtained for $25 or 1175
rupees at your local Indian bookstore
Product: Ingredients
• Cultural Factors
– Indians prefer savory vs. sweet foods
– Many Indian foods have numerous spices
– Indians prefer fresh and nutritious, healthy
foods and many foods consumed are
homemade
– There exists a large focus on vegetarian
diets (as emphasized through religious
teachings and practices)
– Peanuts used in a lot of Indian cooking
Product: Packaging
• Recently, Skippy has updated its packaging
with a new vibrant and upbeat design
– Maintained the color schemes
and big red Skippy logo
– Incorporated new,
family-friendly cartoon
character, Skip.
• Legal Factors
– Packaging must have Hindi along with English on
the label
Product: Packaging
• Cultural Factors
– Literacy rate of 65% in 2001
– Numerous religious symbols and colors
– Ganesha: Elephant God…maybe avoid “The
Nutshells,” the Skippy elephant band
Product: Packaging
• Consumer Behavior Factors
– Due to limited storage space and frequency
of shopping habits the jars of peanut better
are currently too large for the market
Too big!!
Promotion: Types
• Currently in all main categories (Unilever
spent $9.3 million on Skippy last year)
– Also promotions like….
•
•
•
•
•
Endorsement by Derek Jeter
Product placement in Nickelodeon productions
The Skippy “Nutshells” elephant band
Several charity promotions
“America’s Nuttiest Family” contest
Promotion: Types
• America’s Nuttiest Family: The Hurds
Promotion: Types
• India’s Nuttiest Family: The Patels?
Promotion: Types
• In India…
– Media availability has increased
exponentially
– Competition is unlimited
– Budgets are large
– Expectations of advertising are high
Promotion: Types
• Hindustan Lever
– Largest advertiser (6,966 mill Rs in 2001)
• Largest in every category but print media
– Most admired company
– Top marketer
• Indian Advertising Expenditure by Medium (US$
million)
TV
Print
Radio
777.3
894.5
46.6
Cinema Outdoor
7.2
134.9
Promotion: Types (TV)
• 75% household penetration
– Color TV: 35.7%
– Cable: 49.0%
• Legal Factors
– No wholly political or religious ads
– For children: “Ads must not suggest that,
unless children buy (or encourage others to
buy) the advertised product or service, they
will be failing in their duty or lacking in loyalty
to any person or organization.”
Promotion: Types (TV)
• Cultural Factors
– All media available in English, Hindi, and variety of
regional languages
– May be criticized on grounds of deception,
manipulation, bad taste
– For rural areas (70% of pop.) creating brand
awareness most important
• Technology Factors
– Same media outlets available in India as in U.S.
– Increase in satellite and cable TV
• Economic Factors
– Peak rate for 30sec
• 18,000 to 1,200,000 Rs ($400 to $26,000)
Promotion: Types (Print)
• Print media reaches 70% urban adults
• Infrastructure Factors
– Nearly all controlled by private sector
– Ads available in daily newspapers, weekly
and monthly business magazines, news
magazines and industry-specific magazines
– Total circulation of newspapers (‘000):
39,676
Promotion: Types (Print)
• Economic Factors
– Full page color ad (Newspaper):
• Min: 76,960 Rs
• Max: 22,340,000 Rs
– Full page color ad (Magazine):
• Min:7,000 Rs
• Max: 530,000 Rs
Promotion: Types (Radio)
• Gov’t owned All India Radio reaches 90%
of pop.
• Hindustan Lever: top radio advertiser
• Infrastructure Factors
– Private radio, limited to FM music channels,
only available in a few cities
• Economic Factors
– Peak rate for 30sec
• 15,000 to 21,000 Rs ($330 to $460)
Promotion: Types (Internet)
• Homes with internet (2002): 600,000
(0.3%)
• Adults with internet access (2002):
6,500,000 (1.0%)
• Economic Factors
– Most cost efficient
• Rates from $227 per month to $2,272 per month
Promotion: Message
• Currently…
– Targeted towards children and moms with
cartoon imagery and “food as fun”
– Use of Skip
– “If you’re going to sell to children, you have
to target them because today’s moms ask
their kids what they want” -- Youth-marketing
advertising consultant
Promotion: Message
• Legal Factors
– Must be careful with ads directed at children
• Cultural Factors
– Skip: blond haired white kid who surfs
– Is food fun in India???
Considerations
• Low income affects pricing but population
is a key asset
• Presence of Hindustan Lever Limited and
available facilities
• Limited competition
• Poor infrastructure
• Large reach of TV and print advertising
India, Now...
India, Post Skippy invasion…
Questions?
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James Corbello
Lindsay Johnson
David Lindvall
Brent Wakley