UncrustablesVenturing Forth to Japan

Team JapanStephanie SmootCharles Hobing

Ronita FarriaJared HoldenChris Chester

Potential Market? Consumer Demand (similar economic strength as the

United States) Traditionally, parents & grandparents fixed

meals throughout the day In recent years, frozen foods & fast foods have

gained significant market share as Japanese interests have shifted toward convenient foods

Ready-to-Go-Meals similar to Uncrustables are slowly being implemented into the culture

Competitors have already introduced similar products Mothers are working outside the home and children

are attending a vast array of activities outside the classroom

More difficult to schedule & prepare meals

Direct Competitor Yamazaki

Today, its products include bread, sweet buns, Japanese-style confectionery, Western-style confectionery, processed bread, and prepared rice and side dishes, as well as jam, desserts and prepared foods in retort pouches.

Blueberry Jam Sandwich! (Japan 1998)Another great idea from Yamazaki Bakeries in Japan.  A simple slice of white bread is transformed into a snack treat with a schemer of blueberry jam!

Leading Competitors Nestle & Yayoi & ITOCHU

Ajinomoto Katokichi Nihon Suisan & Nichirei Nichiro Sunfoods

Nestle, Yayoi & ITOCHU

Joint venture in 2000, the two made new frozen brand called Buitoni. This product is an Italian pasta The companies have also added

frozen personal pizza, gratin, and other frozen small pasta dishes.

Ajinomoto

“For over 90 years, we’ve been the brand Japanese food-lovers rely on for the freshest, best-tasting, and most convenient ingredients seasonings and entrées.”

In Japanese jam market with Welch’s Japanese # 1 in brand recognition. Competitive with rice bowls and other rice

snacks. Joint ventures worldwide with companies like

Kraft and Kellogg.

Katokichi Katokichi has extended its

product range into confectioneries, dairy products, soft drinks as well as a vast array of frozen foods.

Such products include breaded shrimp, potato croquettes, seasoned rice and Japanese style buckwheat noodles.

Katokichi aims to maintain high sales by focusing on providing balanced-nutrition, calorie-controlled, safe food.

Frozen Goods

Market Share

Deep Fried Seafood

30%

Wheat and Buckwheat Noodles

45%

Okonomiy-aki and Takoyaki

35%

Nihon Suisan & Nichirei

Both companies are large in Japan, especially in frozen goods and fish products.

These companies have gone global and have made joint ventures with other global companies, some even from the US.

Nichiro Sunfoods Traditional company which relies on

brand loyalty Retains quality under the motto of

“providing products that will satisfy its customers”

Over 46% of Nichiro’s sales are generated within frozen foods.

The Group’s main business areas include the manufacturing and selling of processed foods, as well as the catching, purchasing and selling of marine products.

Frozen foods marketCategory % Share

Frozen meat, fish and seafood

54.10%

Frozen ready meals 24.20%

Frozen fruit and vegetables

14.80%

Frozen potato products

5.00%

Frozen bakery products

1.10%

Frozen desserts 0.80%

Market Share & Potential

Uncrustables are categorized under frozen ready meals nearly 25% of the frozen foods

market and growing With growing capacity of frozen

foods market, a reliable means of distribution will be necessary

Distribution Smucker’s Locations:

Nearest production facility to Japan is located in Australia

Transportation possibilities Shipping from Australia

Other major facilities in: United States (Uncrustables manufacturing location) Canada Brazil United Kingdom

Distribution & Imports Tariff 2%-3.4%

One of the lowest in the world Inexpensive to ship to Japan

Possibilities for Distribution Include: Ship Uncrustables from Scottsville plant

Expensive Logistics chain required to complete transfer

Produce Uncrustables in Australia and ship to Japan Expensive

Purchase new capital to manufacture product Produce in Japan

Joint Venture Merger & Acquisitions Franchise

Distribution cont… Importers, such as Smucker’s, often distribute directly

to the retailer. In Japan, 30% of snack foods and confectionaries, such as

Uncrustables, are delivered in this manner. The remainder distribute to wholesalers.

Wholesalers are crucial to the food distribution industry in Japan.

Their services are in high demand The industry leaders are SAN-ESU Inc., Yamaboshiya Co.,

Ltd and Takayama Co. Possible business relations

Products are bought at small profit margins by larger supermarkets such as Daiei, Ito-Yokado, Jusco, or convenience stores such as Seven-Eleven, Lawson

Similar to U.S. wholesaler distribution methods

Role of Wholesaler Vital role due to warehousing capabilities

in limited storage market and excellent delivery standards.

Retailers are currently cutting back on the merchandise that they stock in inventory.

Convenience Factor Wholesale companies are willing to handle all

supplier issues and paperwork that retailers wish to avoid. Convenience is the number one priority of the retailer.

Distribution Channel

Price of Distribution

Product importers generally set profit margin of 10-15%.

After import tax and transportation costs, companies expect to sell their product to wholesalers for 40% of the retail price. Example

About 45 yen every 100 yen asked for as the sticker price.

Market Segmentation Demographics-

Total Population: 127,215,000 Life expectancy : 82 years

Age Children ages 5-14: 9.6% Parents ages 25-44: 27.6%

average female marriage age 27.3 yrs average make marriage age 30.0 yrs. Rarely bear children before marriage

Grandparents ages 60-74: 17.08% Nearly 65% grandparents live with family

Gender Male (48.9%) Women (51.1%)

Race: Japanese (99%) Korean & Brazilian & Pilipino (1%)

Distribution of Wealth: Gross Domestic Product (2003E): $4.3 trillion (2004F): $4.8 trillion Real GDP Growth Rate (2003E): 2.5% (2004F): 4.5%

Religion: Shinto & Buddhism

Segmentation cont… Psychographics

Activities/Interests Large Spectator sports:

Baseball & Soccer Heavy Emphasis on exercise

Jogging, skiing, martial arts “after school, kids stay to participate on

athletic teams” Opinions

Health conscious: “Lunches are very well balanced meals. The

Japanese eat a lot of protein and carbs. They aren’t really dairy and sugar people”

Segmentation cont…

Geographic's Live in urban areas: 78.7%

Provides highest density of supermarkets and advertising capability

Rural & work in agriculture: 6% Maintains cultural biases towards Western

products 50% live on 2% of the land

Highly dense Cities Tokyo: 14 million

Buyer Behavior Japanese do not buy in bulk

Purchase groceries for only a few days in advance

Eat smaller portioned meals Not many large grocery chains “Peanut Butter isn’t readily available”

Eat fresh foods more often Diet consists mainly of rice and fish

Eat fast foods less often Mainly Japanese style fast food

Fresh foods & not fried as American Smaller portions & more expensive

Targeting

Smucker’s does not target kids Products in America targeted towards

parents Children carry strong influence in what is

bought

In Japan, 65% of the elderly live with their children Major role as caregiver for grandchildren

“I can’t see a grandma in Toyama buying some Uncrustables”

Current Positioning Brand Equity

Americans recognize JIF & Smucker’s Americans associate these names with:

Quality & expertise in product category Family oriented organization

Lunch sandwich for children Snack between school and activities

Fast and convenient American “soccer moms” on the go Easy to make, children can make without

assistance

Positioning in Japan No Brand Recognition

Smucker’s products are not presently in the country

Similar products are available and can be compared against

Implementation through the 4 P’s Distribution Product Promotion Price

Distribution

Retail environment Fewer large chain grocery stores

Reach people with Western food interests Carries specialty items such as Peanut Butter More assortment and shelf space

More local groceries/convenience stores Reach wider range of people more frequently Carries more traditional rice and fish products Less shelf space

Product Core Product Concept-

PB&J and Grilled Cheese without crust Peanut butter is not accessible White bread and sweets are not consumed

as heavily as in the U.S. Strawberry jam and jelly are prominent in

pastry dishes Grilled cheese is only consumed in Western

Style Restaurants There are a number of people who really like

Western food

Product cont…

Brand No Brand Recognition

Smucker’s and JIF not currently in the country

Possibility for brand image Building Recognition and Awareness is

costly Keep current image

Smucker’s traditional American image Alter image

Product cont… Labeling

Requires brand name to be printed in Japanese

Japanese translation of brand name may not equate American meaning

No regulation on ingredients listed and nutrition facts

Can be in Japanese or English because both languages are taught throughout schooling

Products cont… Packaging

Japan's packaging laws were designed in conjunction with waste management and recycling initiatives in mind.

Although there are no bans on any type of packaging material in Japan, the government has strongly encouraged businesses and industries to use recyclable packaging materials.

Bright, colorful packaging is tasteful to Japanese consumers

Promotions in the U.S. Advertising message

Quick and easy snack or meal Family values shown, adult and child

interaction Ex. Picnic lunch

Current Message Grilled Cheese: “Kids and Adults Agree:

Grilled Cheese is the #1 hot Sandwich” PB&J: “Kids and Parents Agree: PB&J is #1 in

lunch time Sandwiches”

U.S. Promotion cont… Types of promotion

Sales Promotion Price discounts

coupons in print ads in magazines and news papers Samples, at specifically designated locations Bonus packs Contest and sweepstakes

Smucker’s 2004 Cookie Classic, free gifts with catalog subscription

Event sponsorship Smucker’s stars on ice: represents wholesome family

entertainment Feed you Imagination give-away: could win an all

inclusive trip to see stars on ice

U.S. Promotion cont… Public Relations

Smucker’s Holiday Classics: a contest to win festive Holiday gifts

Direct Marketing Free Smucker’s online store catalog Free Smucker’s Recipe Booklet

Promotion in Japan “The real key to success… is good advertising

that emphasizes taste and wellness messages”

Current emphasis on family values relates to wellness

Comparison advertising is culturally frowned upon

Belief in harmony and peaceful coexistence Current message of # 1 disrupts harmony

TV ad’s can not exceed 18% of weekly broadcast time – minimized to 10% during primetime hours

Promotion in Japan cont… Types of promotion

Sales promotion used throughout Japan Price discounts

Coupons Contest & Sweepstakes

Japanese enjoy contests and game show prizes Event Sponsorships

Seen as appropriate method of advertising Public Relations

Public opinion large factor in overall acceptability of product

Direct Marketing Value knowledgeable salespeople Catalogs frequently used throughout country

Media AdsTypes of Media Available

Time $ advertising expenditure

Television 30 sec primetime and weekend

$18,100

Radio 20 second $407.25-$633.5

Internet One year $10,860-$18100

Outdoor SitesStyles Avg Monthly

$Minimum Booking

Billboard $11,312.28 12 month

Mega-Vision $14,299 2 weeks

Bus wrapping $63,350 1 day

Station poster $3,278.51 7 days

Hanging poster in train

$498,700.25 2 days

Car card in train

$19,475.6 1 month

Promotion in Japan Public transportation is the largest form

of transit Geographic coverage consists of dense

urban areas that efficiently accommodate advertising Subways: conducive to advertising Buses: interior and exterior advertising Billboards: found in consumer districts of

major metropolitans

Pricing

Currently $2.19- $2.79 (varies by retailer)

Only packs of 4 are currently being sold In Japan, the number 4 is a

representation of death Changing units in package will change

cost Changing package design will change cost

Pricing in Japan 241.995-308.295 Yen (Uncrustables) Supermarkets, grocery stores, and

convenient stores prices vary Lunch meals range from 280 Yen to 500 Full dinner meals

-inexpensive range from 500 to 1000 Yen-expensive range from 1000-3000 Yen

Questions?