Justification of International Market Buki
Channel and Pricing Strategies
A marketing channel is the middle means between merchandise leaving the producer and meeting its consumer. Companies use marketing channels to promote, negotiate, finance, position, and shoulder some of the risk of distributing merchandise (Kotler & Keller, 2007). In the case of Kudler Fine Foods the marketing channel to be implemented for both the Italian domestic stores and the international France rewards program will be a multichannel marketing system strategy of working with vertical wholesalers and other companies. This is justified as neither Kudler nor its products have the capital or resources to enter the market alone. Horizontal alliances will be formed when Kudler partners with holistic and organic food manufacturers in Italy and France to sell goods (University of Phoenix, 2011). The Kudler Fine Food brand will also employ the pull strategy, similar to other global brands like Nike and Coca-Cola (Kotler & Keller, 2007). This is because Kudler store loyalty will be essential in facilitating the rewards incentives gained through purchasing various merchandise. To further enhance the locations of Kudler Fine Foods the company is exploring options to venture into the “brick and click” market of channeling. This will be done to gain local intermediaries acceptance (Kotler & Keller, 2007). The online service will be similar to the American grocery chain giant, Kroger’s specialty grocery program, which allows consumers to order hundreds of hard to find items online and pick up in store locations once avaible (Kroger, 2012).
Pricing Strategy
After Kathy Kudler visited many of the local supermarkets and specialty shops, she feels Kudler’s should mimic their pricing which they have in Italy with their new store in France. Both countries currency is the Euro and pricing is very similar. The similarities will also allow for an internet presence without causing any problems in either store. Customers will see the same pricing they are used to in the stores and the foods will reach international customers. For Kudler to have a presence on the internet will allow tourists who find Kudler Fine Foods while on either business or pleasure to continue to purchase their favorite items when they return home.
Kudler Fine Foods currently imports many of their agricultural products from France, they would be able to take advantage of the increased purchasing power and negotiate better pricing (US Department of State: Diplomacy in Action, May). Kudler will be purchasing twice the amount of agricultural products than they have purchased in the past, importing half to Italy, and keeping the other half in France.
Government and Political Bodies-Buki
Economics
When Kudler began looking for a new area to market to, the ease of trade was a big concern. The forming of the European Union (EU) has made it possible for easier trading in Italy and France. The EU was formed in 1957, to reduce the barriers of trades with businesses in the Union (Kotler & Keller, 2006, p. 673). If a non-union member wants to trade within the union, they must follow certain policies that the union members do not have. Both Italy and France are very successful with this arrangement, but the introduction of the Euro is not good for Italy. The rise in prices, when the money changed, has begun a recession. When added with the global crisis now in play, the Italian public debt is above 115 percent of gross domestic product (GDP) ("Italy," 2012, p. 6). Italy’s economy is growing again, but the slow economy is one of the reasons for Kudler to branch out. Kudler still enjoys the wine that Italy produces. Italy is one of the world’s largest wine producers and has a good agricultural area in the southern part of Italy. Industry is also a strong business in Italy and is predominant in the northern part of the country. Industry is about one-third of Italy’s GDP ("Italy," 2012, p. 6). The other two thirds are mostly tourism and the service sector ("Italy," 2012, p. 6). Italy has strong trading ties with France already in place, so it will be easy to initiate business there.
France is one of the world’s predominant agricultural producers which make France self-sustainable ("France," 2012, p. 6). France is second largest; the United States is the largest agricultural producer. These crops are vital to Kudler’s success in France because the store advertises fresh produce, and buying locally. Agriculture is not France’s employers, the service sector is. The service sector provides seventy percent of the labor force, while agriculture is around four percent ("France," 2012, p. 6). France is the number one tourist destination of the world. Kudler is hoping to use these tourists to help their business flourish in France and around the world. France’s economy ranks third in the European Union (Coleman Ph.D, 2012, p. 136). France holds this position even though they have high unemployment and high public debt of about 83.5 percent of GDP (Coleman Ph.D, 2012, p. 137).
Evaluation of Innovation and Technology
The use of technology is a great means of tracking what the consumers' interests are. This can be achieved with a loyalty card (such as a credit card) that contains a magnetic strip that tracks all the products the person or family has purchased to date. Offering a reward as the consumer approaches their rebate level with increased purchases. AMEX Holt Renfrew (HR) does this with their card holders offering a 1% gift card on all AMEX purchases that can be redeemed or gifted to someone else for use at HR at any point in time (AMEX, 2012). These rewards cards automatically e-mail you when you reach your reward redemption point for the convenience of additional purchases. This allows Kudler to track which products are most popular, and use this information to promote products they may be best to discontinue by offering them as the reward item in an effort to move the items. This will also facilitate product waste reduction and increase the turnover of merchandise.
Combining this with the on-line shopping and ordering service will allow direct delivery from the warehouse to the consumer's home cutting overheads, transportation and storage costs, as well as reduce produce sitting in the store instead of the need for the customer to carry it back to their place of residence.
Evaluation of Social and Demographics
France is a very educated country; they have a 99% literacy rating which ranks them number 30 in the world. The population of the metropolitan of France, not the outlying territories is 63.1 million in 2010; they are expecting a 55% growth in 2011. The population is made up of 51% Roman Catholics; however France also has the largest population of Islamic and Jewish religions as well. France’s workforce is 28.3 million broken down by 75% services, 21.7% industry and construction, 2.9% agriculture, and .4% miscellaneous (US Department of State: Diplomacy in Action, May ).
The above social and demographic information is very important for the type of business which Kudler Fine Foods is planning on introducing into France. If the workforce had 75% agriculture and only 2.9% services Kudler would be heading for disaster, there would be little to no market for their gourmet foods and wines, because they would grow their own. Kudler will also have to take care to be certified by the French organization ASIDCOM; this group will come in and make sure Kudler properly prepares their products so that the large Muslim population will be able to shop in their stores (ASIDCOM, 2012). The third largest group of consumers would be the Jewish population; Kudler will also need to be aware and if the location of the new store is in a high population, they should look at finding the proper vendors and create a special department with food that follows the Kashrut dietary laws. Location will be important in pricing.
Conclusion
References
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