kudler fine foods new product line launch 1326835104

Running head: PRODUCT LAUNCH 1

Kudler Fine Foods Product Launch Plan

Tara Appling-Crisp, Sada Ashcraft, Molly Cook, Kimberly Ferketich,

Denise Hoyt, Van Marsalis, and Dion Sanders

University of Phoenix

MKT/571

March 7, 2011

Susan Rusnak


Kudler Fine Foods Product Launch Plan

Kudler Fine Foods provides gourmet fare to the San Diego area of California. After

realizing continuous revenue increases since 1998, expansion efforts to Mexico and Spain

include a new product line offering of gourmet flavored vinegars. Initial market research and

competition research provided information that these areas were ignored in the gourmet food

market. A wide range of market research determines success or failure when entering an

unexplored market with a new product. For example, choosing the appropriate target market and

communications mix when entering the gourmet market of these countries is vital to success.

Pricing of the new products requires additional research regarding distribution and product

launch expenses as detailed in the financial budget and unit forecasts. Finally, public relations

efforts before the store grand openings require planning and implementation of the appropriate

budget and event efforts. Continuing all of these efforts during the life span of the company

provides Kudler Fine Foods a leading position in the gourmet food industry of Mexico and

Spain.

Product Description

Kudler Fine Foods offers a variety of gourmet food products within the meat, cheese,

produce, and bakery categories. An area that requires development specifically in the expansion

efforts of the Mexican and Spanish markets is offering other gourmet ingredients used in cooking

and serving these food items. Kudler’s marketing overview indicates the use of gourmet

websites and magazines to create ideas for new products. Research on igourmet.com (2011)

revealed that flavored vinegars offer a variety of options beneficial for Kudler. Offering flavored

vinegars to create new tastes and further authenticate the food provides Kudler with additional


gourmet options, such as fruit vinegars, tarragon white wine vinegar, or Bavarian beer vinegar.

Each flavor is intended for different meat, produce, or cheese uses. For example, pomegranate

champagne vinegar provides a new depth to soups and stews. Likewise, the framboise fruit

vinegar pairs well with duck or bleu cheese. A new offering out of Brazil includes acai berry

vinegar, which provides additional nutrients to any salad.

Market Needs

After extensive marketing research, Kudler came to the conclusion that because the

upper-middle and middle-class people in Mexico and Spain are growing, their tastes and their

pursuit of higher quality products would cause them to desire gourmet foods. Gourmet foods are

growing in popularity as a hobby as well as becoming another method to display a higher place

in society for many people. The new line of flavored vinegars would meet the customers’ needs

and desires. Kudler needs to maintain a thorough knowledge of all their products they have

available, including the new line of flavored vinegars, so they can educate their customers with

the different uses of these products. They also need to provide customers good service giving

them a high impression of the company’s place in the gourmet food market. Therefore, the

products carried by Kudler represent a solid demand in the new market and excellent opportunity

for growth. Because there are a minimal amount of competitors, Kudler will help meet the

growing demands for gourmet foods. Kudler needs to build a sustainable business with a loyal

customer base in the market by establishing a high level of service. Kudler’s market needs

analysis enables the company to meet current needs and plan for future demands (Primary

Intelligence, 2011).


Market Growth and Potential

Limited competition and various economic factors combine to provide a great deal of

market growth opportunity for Kudler Fine Foods in both Spain and Mexico. The exclusivity

aspect of the Kudler’s gourmet products will help the reality of market growth come to fruition.

The company will enter the market with a clear and concise plan and the budget to grow the

product popularity and increase demand in both regions.

Mexico’s economy is facilitating the surge of upper-middle-class consumers (Wurst,

2004). As well, Spain’s economy is positively recovering from the events of the past few years

of economic downturn (Shasha, 2010). Both factors are encouraging to a company selling

gourmet products, such as Kudler Fine Foods. The competition of each country is extremely

minimal. To maximize the growth opportunity, the approach taken in the initial product launch

and market entry stages is crucial to the company’s success in these new markets. Adherence to

the marketing and product launch plan is a vital component of the approach. The opportunity is

identifiable in terms of the economic conditions of both countries and few competitors.

However, Kudler’s ability not only to identify, but also reach their target market will be the

determining factor for the company’s success in their initial market entry. As well, this process

will have profound effects on ensuring a continued presence and success in both markets.

SWOT Analysis

Strengths Weaknesses

1. Easy supervision of all activities because of the small size of the company

2. A wide variety of gourmet foods and flavored vinegars

1. Purchasing products through wholesalers rather than making on location will cause higher costs2. Compliance with rules and regulations of Spain and Mexico requires vigilance


3. Minimal number of specialty food stores in Mexico and Spain offering flavored vinegars similar to Kudler’s

4. Locations in Mexico City and Madrid allow economic targets of the middle and upper-middle classes

5. Kudler provides recipes and in-store demonstrations

6. User-friendly website in Spain with seasonal products, specials, user to user communication, recipes, and tips

7. High quality customer service with friendly and helpful interactions with customers

3. Expansion requires capital from outside sources

Opportunities Threats

· 1. Pursuits of gourmet food increases as the middle and upper-middle classes grow in Spain and Mexico

· 2. Profits increase as customers purchase other gourmet products in addition to the flavored vinegars

· 3. Possible further expansion to other international markets

· 4. Increasing customer awareness of products offered through street fairs and farmers’ markets

· 1. Poor economic conditions create the need to purchase necessities rather than specialty products

· 2. Increase in competition created through the popularity of the new product

· 3. Government regulations could affect consumer spending


Competition

Domestic Competition

Competition in Mexico is minimal because the majority of local stores in Mexico are

small local convenience stores (Tours in Mexico, n.d.). Mexicana and Gigante are large stores in

Mexico that offer more costly products brought in from the United States. These stores are

direct competitors as they offer gourmet products with high prices because of the value. Most

manufacturers in Mexico are not direct competitors as the manufacturers do not offer the same

flavored vinegars as Kudler Fine Foods. The manufacturers are indirect competitors as they do

offer vinegar products, and the products are sold locally with different flavored vinegar products

not offered by Kudler. The company also competes with online gourmet food sales as the

competitors can ship product to Mexico and offer multiple vinegar products.

International Competition

Kudler has the opportunity to initiate a product launch to sell gourmet flavored vinegar to

consumers and businesses in Spain with many lurking competitors. Spain markets sell with

different venues for food shopping such as central markets, hypermarkets, and open air markets

(Think Spain, 2007). The central markets do not offer extensive gourmet products. However,

the hypermarkets do offer gourmet products and are known to frequently import. In addition to

the central markets and the hypermarkets, Kudler will compete in the open air markets selling

products in which gourmet food seems to be a rarity.


Marketing Strategy and Objectives

Because Kudler Fine Foods has realized success and growth in the California locations,

expansion and offering new products becomes the logical next step for the company. After

significant research, Mexico and Spain are revealed as prime locations for the new stores.

Additionally, a new line of flavored vinegars provides a variety of options for implementation

into the Spanish and Mexican cuisines. The identification of the target audience as the middle

and upper-middle classes of Mexico City and Madrid provides a clear direction for the marketing

strategy and objectives necessary for success. The objectives for the marketing plan are to

increase revenues, decrease costs, and most important provide the customer with quality products

to ensure return to the store. Implementing a loyalty program or frequent shopper program such

as the traditional punch card concept provides customers with incentives and strengthens

customer retention. In-store demonstrations and the provision of product ideas and recipes gives

the customer an exciting experience within the store that also prompts frequent returns and

further increases revenues. A third objective for Kudler involves reducing costs, which is

accomplished through the discovery of flavored vinegar suppliers close to both of the new

locations thereby avoiding high shipping and import costs.

Pursuing a holistic marketing strategy serves a dual purpose because it places the focus

on the value of the customer while increasing revenues for the company (Kotler & Keller, 2007).

Although Internet usage is minimal in Mexico, providing Spanish customers with a blogging

option on the Kudler website allows customer interaction with the store and other customers.

Additionally, using a recipe provided by a customer during in-store demonstrations or in a

monthly newsletter in the store shows the customer the company values the culture as well as the


ideas of the customers. Managing the effectiveness of the marketing plan for each of the

markets, in addition to managing the budget, requires constant measuring of the results of each

tool implemented into the communications and marketing plan. The survey covers pricing,

customer service, store atmosphere, product selection and quality as well as employee

knowledge of the products. Duplicating the online survey in the monthly newsletter provides

customer without Internet access a method of personal communication. Tracking the results in

the computer ensures accuracy and monitoring for any required changes to meet customer needs.

Coupon incentives for the customer once the survey is completed further increases the results

and customer value.

Targeting

With the steady growth of the gourmet food industry, Kudler Fine Foods must focus on

strategic markets as the expansion endeavor develops in Mexico and Spain, and also promoting a

new line of flavored vinegars. Although the unemployment rate of Spain was 20% as of the first

quarter of 2010 because of the global economic crisis, the number is slowly decreasing as global

economic conditions improve with many moving from rural areas to the larger cities creating an

increase in the middle classes (U.S. Department of State, 2010). The same migration is true of

Mexico. Because the middle and upper-middle classes are on the rise and the primary purchasers

of gourmet fare, Mexico City and Madrid are important targets to reach with the message

conveyed through Kudler’s marketing strategies. The middle and upper-middle classes are

people who will sample flavored vinegars with the gourmet styles of cooking growing in interest

for citizens and travelers alike. Capitalizing on the growing number of upper-middle and


middle-class consumers and travelers within Mexico City, Mexico, and Madrid, the new Spain

venture allows Kudler to gain a competitive edge in the gourmet food industry.

Product Positioning

Kudler Fine Foods goal in positioning the flavored vinegars within the market is to find

media channels that create a sense of uniqueness compared to the competitors. This includes the

logo that defines and introduces the product on ads that inform and create an image that isolates

Kudler from the very competitive vinegar segment. Kudler also wants to send the promotional

marketing message to their select audience with the least amount of time and cost.

Kudler wants to position the flavored vinegars to represent the company within the home

location of Mexico and the international new venture in Spain. Both areas are competitive and

Kudler Fine Foods has to find ways to rise above the competition. The flavored vinegars offer a

gourmet cooking experience where they taste and smell natural herbs and colors pleasing to any

pallet. The vinegars cannot be compared to any others on the market and stand out alone with

the variety that Kudler offers. The products are accommodating to the different Mexico and

Spanish markets so that the middle and upper class cooks can enjoy trying many flavors.

Mexico uses a large amount of chilis in many of their dishes and so Kudler has created the chili

flavored vinegar that targets family recipes.

Kudler Fine Foods brings the flavored vinegars to Spain as a new-to-the-world product in

the areas of the different flavors and high-end gourmet tastes. Spain is known to enjoy vinegar

with many of their dishes daily. The variety of spices and herbs used in the fruit, Bavarian, and

other flavored vinegars will bring uniqueness and a specialty gourmet option to Spain.


Distribution Strategy

Supply chain efficiency is critical to the success of this product line expansion. Kudler

will purchase the flavored vinegars for its Mexico stores through Wholesale Gourmet, a supplier

based in Houston, Texas. Wholesale Gourmet offers a variety of products from different

vendors. The buyer from each retail store orders and pays through the website with the shipment

sent directly from the vendor chosen in the ordering process. With Free on Board (FOB)

shipping terms, Kudler owns the product purchased as soon as the shipper takes possession

requiring close involvement in monitoring the quality of packaging and transportation

arrangements to minimize added cost of processing claims on damaged goods (Sell Gourmet,

2011). Distribution to domestic customers in Mexico takes place primarily in the existing store

through strategic placement and point of sale demonstrations in addition to street fair vending.

The new location in Madrid, Sprain requires the use of another supplier because

Wholesale Gourmet only ships on the North American continent and a few surrounding islands.

Therefore, Kudler must purchase the flavored vinegars from Cotswold Fayre, a distributor in the

United Kingdom, to supply its store in Spain. Cotswold Fayre requires the buyer to purchase a

full pallet of a product at one time for international shipment. By ordering an entire truckload of

product, the unit shipping cost is minimized as needed to increase revenues and aid in the

reduction of cost of goods sold (Cotswold Fayre, 2004). The new store location in Spain

provides customers an avenue to purchase Kudler’s products including the new line of flavored

vinegars through point of sale demonstrations, symbiotic placement, an interactive website that

includes newsletters and blogs, and distribution at street fairs and farmers’ markets.


Marketing Communications and Public Relations

“A powerful marketing communication strategy should serve to make your business

stand out from the crowd” (Swearingen, 2010, p.1). A variety of marketing efforts accomplishes

that goal. Kudler Fine Foods will use radio and television advertising, fliers and mailers, and

purchase incentives to identify the new product line and benefits of the flavored vinegars in

Mexico. Point of purchase displays, demonstrations, and in-store samples build brand awareness

and quality in both locations. Because of low Internet usage per capita in Mexico, advertising of

that capacity is best served in Spain in addition to infiltrating Spanish gourmet food stores and

restaurants with mailers. Street vendors and farmers’ markets specific to Spain, provide a

personal method of marketing that permits customer feedback. Planning for this event provides

options for further public relations techniques.

“Public relations is the attempt to influence the public's perception of a product, service,

or idea by working through public channels such as the media…The advantage of using public

relations is that it is thought to produce a more convincing message than advertising” (Marketing

Methods, 2008, p. 1). Public relations functions provide another aspect of communication

important to Kudler’s success. These tactics, when used as part of a communications strategy,

builds the new line of flavored vinegars by issuing periodic press releases as well as organizing

special events to generate positive media coverage. Kudler also has a responsibility to maintain

an ethically sound image while implementing its domestic and foreign communications strategy.

Developing an effective and attractive communication with the target markets provides Kudler

with a strategic image both valuable and profitable.


Pricing

Kudler Fine Foods is offering flavored vinegar products in Mexico and Spain and must

create a price point that will cover the product launch costs as well as shipping costs to ensure an

increase in revenue and a more profitable company. Kudler determines the price by using the

six-step process for pricing policy that includes understanding the objective, demand, costs,

competition, pricing method, and the final price of the flavored vinegar product (Kotler & Keller,

2006). Kudler’s objective is to price the product at an amount that will allow an increase in

revenue. The company determines the demand of the product by the market need of gourmet

flavored vinegar products in Spain and Mexico.

The last four parts of the six-step process begin with understanding costs, competition

pricing, the pricing method, and the final price. Kudler must determine the cost prior to setting

the price to ensure profitability. In relation to Kudler’s budget and projected cash flow

statement, the purchase price of $9 per unit and the total labor determine the cost of goods sold.

Additional product launch costs are marketing, development, and allocated overhead costs.

Competitor prices start around $4.95 and increase to $30, depending on the rarity of the flavored

vinegars, estimating without the inclusion of shipping costs (Amazon.com, 2010). Using the

keystone and psychological pricing methods, Kudler can price the flavored vinegar products at

$14.99 per bottle, which is almost twice the purchase cost, competing in the market while

achieving a reasonable profit.


Market Research

Kotler and Keller define market research as “the systematic design, collection, analysis,

and reporting of data and findings relevant to a specific marketing situation facing the company”

(2007, p. 42). Because Kudler Fine Foods is entering new markets in Mexico and Spain as well

as introducing a new line of flavored vinegars to an already extensive product list, a wide range

of research is required to ensure a successful product launch and introduction into the gourmet

food markets of the new locations. Initially, research required the search of a variety of gourmet

food stores and online gourmet providers to find a product that Kudler lacked and could easily

implement into the stores. Flavored vinegars that cannot be found in traditional grocery stores

became the best choice because of the range of uses for a variety of flavors. Advertising the

flavored vinegars also serves a dual purpose because the usage and recipe ideas provided prompt

the customer to purchase other items in the store needed for the recipe.

Additional market research required the discovery of information about the economic

conditions of the respective countries to determine a target audience. Competition and pricing

information was obtained through online research and conversations with an expert in the

gourmet food industry. This information allowed Kudler to determine a price lower than the

average competitor while still covering the necessary costs and allowing an increase in revenues.

Additionally, Wholesale Gourmet was chosen as the supplier for the Mexico location because of

a limited supply of companies willing to ship to the country. Internet research also located a

supplier in the United Kingdom for the Spain location. All of the research provided ample

information for a seamless budget detailing product launch expenses as well as unit forecasts for

three years with estimated sales increases for each year.


Financial Budget with Three-Year Unit Forecasts

Appendix A and B reveal the financial information for Kudler Fine Foods including

product launch expenses, unit forecasts for three years, capital budget, expected sales with

determined per unit pricing, and a projected cash flow statement.

Conclusion

Kudler’s success in San Diego since 1998 contributes to the company’s decision in

expanding to Mexico and Spain to sell gourmet flavored vinegar products. The company’s

marketing plan assists Kudler in reinforcing the decision for the expansion and provides a floor

plan in regard to the description of the product, market needs, market growth, market potential,

and a SWOT analysis. In addition the plan provides research in regard to competition, marketing

strategy and objectives, target markets, product positioning, distribution strategy, marketing

communications, public relations, price, market research, forecasting, and product launch costs.

The company’s research in each area determines the success or failure in the new venture, and in

Kudler’s case the extensive marketing plan provides a path for success.


References

Agroles USA, Inc. (n.d.). Catalan gourmet. Retrieved from http://www.catalangourmet.com/

Bass, F. (January 1969). A new product growth for model consumer durables. Management

Science, 16(5).

Burns, B. (2008). Marketing Methods. In, Marketing Methods -- Research Starters Business (p.

1). Great Neck Publishing. Retrieved from EBSCOhost.

Corrigan, D. (2010). Spain travel. About.com. Retrieved from

http://gospain.about.com/od/beforeyougo/qt/euro_converter.htm

Cotswold Fayre (2204). Website accessed March 6, 2011 at www.cotswold-fayre.co.uk.

igourmet (2011). igourmet.com. Retrieved on February 2, 2011 from

http://www.igourmet.com

Kotler, Philip and Keller, Kevin Lane. (2007). A Framework for Marketing Management (3rd

ed.). Retrieved from https://ecampus.phoenix.edu/classroom/ic/classroom.aspx

Primary Intelligence. (2011). Primary intelligence: the intelligent approach to business

success. Retrieved from http://www.primary-intel.com/flagship-services/market-needs-

analysis

Sell Gourmet, LLC (2011). Wholesale Gourmet. Website accessed March 5, 2011 at

http://wholesalegourmet.net.

Shasha, D. (2010). 2010: Spain’s Economy Rides the Storm. Retrieved from

http://news.xinhuanet.com/english2010/business/2010-12/28/c_13666885.htm

http://gospain.about.com/od/beforeyougo/qt/euro_converter.htm

http://www.catalangourmet.com/


Swearingen, C. (2010). SmallBiz Marketing Tips. Small Business Marketing Tips. Retrieved

from http://www.small-biz-marketing-tips.com/marketing-communication-strategy.html

The Money Converter. (2010. Convert US Dollar to Mexican Peso | USD to MXN . Retrieved

from http://themoneyconverter.com/USD/MXN.aspx

Think Spain. (2007). Spains glorious markets: the cathedrals of the senses. Retrieved from

http://www.thinkspain.com/news-spain/14135/spains-glorious-markets-the-cathedrals-of-

the-senses

Tours in Mexico. (n.d.). Grocery shopping in Mexico. Retrieved from

http://www.toursinmexico.com/general/groceries.htm

Trading Economics. (2010a). Cost to import (US dollar per container) in Spain . Retrieved from

http://www.tradingeconomics.com/spain/cost-to-import-us-dollar-per-container-wb-

data.html

Trading Economics (2010b). Mexico GDP growth rate. Retrieved March 2, 2011 from

www.tradingeconomics.com.

Trading Economics (2010c). Spain GDP growth rate. Retrieved March 2, 2011 from

www.tradingeconomics.com.

U.S. Department of State. (2010). Background Notes. Retrieved from

http://www.state.gov/r/pa/ei/bgn/index.htm

Wurst, E. (2004). Mexican Middle Class Rising. Crossing Borders. Retrieved from


http://cronkitezine.asu.edu/Mexico/middleclass.html

Appendix A: Financial Budget Information


Projected Cash Flow Statement for Product Launch in Mexico and Spain

Number of Units

(forecasted in the first year) Price Total

Sales Revenue Mexico 51615 14.99 $773,708.85

Spain 25861 14.99 $387,656.39

Avg Cost of LaborCOG from Product Launch Exp Budget

Cost of Goods Sold Mexico $45,086.54 $464,535.00 $509,621.54

Spain $22,543.27 $410,270.00 $432,813.27

Gross Margin Mexico $264,087.32

Spain -$45,156.88

Cost per unit Number of units

Development Costs Mexico $0.50 51615 $25,807.50

Spain $0.50 25861 $12,930.50


Marketing Costs Mexico $0.25 51615 $12,903.75

Spain $0.25 25861 $6,465.25


Allocated Overhead Mexico $0.10 51615 $5,161.50

Spain $0.10 25861 $2,586.10

Gross Contribution Mexico $220,214.57

Spain -$67,138.73


Number of Units forecasted in the first year

Mexico Spain

1200 600 Q1

12068 6040 Q2

18206 9121 Q3

20141 10100 Q4

51615 25861 Total

430.125 215.5083 Number of Pallets @ 120 per pallet


Product Launch Expense Budget

Cost Of Good Sold

Mexico

Item

Purchase Price per Unit Amount

Shipping Cost

Import Costs per Container

Number of Containers Total Price

Assorted Flavored Vinegars $9.00 51,615 $ 2,500 $0.00 0 $464,535

Spain

Item

Purchase Price per Unit (in cases) Amount

Shipping Cost per

pallet Number of pallets

Import Costs per Container

Number of Containers Total Price

Assorted Flavored Vinegars $9.00 25861 $ 820 215 $1,221.00 1 $410,270

Note: Purchase Price is at $9/bottle

12 bottles per case

120 cases per pallet

COST TO IMPORT (US DOLLAR PER CONTAINER) IN SPAIN

http://www.tradingeconomics.com/spain/cost-to-import-us-dollar-per-container-wb-data.html

Currency Conversion

http://gospain.about.com/od/beforeyougo/qt/euro_converter.htm $1=0.82 euros


http://themoneyconverter.com/USD/MXN.aspx $1=12.0074 Peso

Shipping Costs

http://www.cotswold-fayre.co.uk/shipping.php

Zone 4 1000 euros converted to dollars in budget

Pallet and Case per Bottle measurements

http://www.catalangourmet.com/

http://themoneyconverter.com/USD/MXN.aspx


Capital Budget

Kudler Fine Foods

Information Technology - FY04 Capital Budget

Apr May Jun Jul Aug Sep Oct Nov Dec Total

Design & Development of B to C Web Site $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 45,000

Replacement of Finance & Accounting System $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 22,500

CRM System $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 5,000 $ 45,000

POS System $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 3,600 $ 32,400

Purchasing System

Note: The capital budget amounts may be adjusted by the business & budget committees based upon IS recommendations and justifications. The capital budget has also been "straight lined" until such time as more definite information is available.


Appendix B: 3 Year Unit Forecast

Assumptions:

1) Roughly follows Bass Model shape (Bass, 1969).

2) GDP growth per quarter for Mexico follows average rate of 0.57% (Trading Economics, 2010b).

3) GDP growth per quarter for Spain follows average rate of 0.67% (Trading Economics, 2010c).