3AGENDA INTRODUCTION CASE DESCRIPTION AND ANALYSIS HistoryAbstractCASE DESCRIPTION AND ANALYSISProposal for entry into Japanese marketSWOT analysis based on pre- launch dataEntry strategySituation after 3 years and leading up to 2001RECOMMENDATION AND ANALYSISMangers point of viewsQuestions and recommendationsConclusion
5ABSTRACTAGRIA, a Swedish milk products cooperative launches its Delissa yogurt in Japan through a joint venture/franchise agreementAt launch in 1991, AGRIA expected to reach between 10% and 15% of the total Japanese yogurt market.Despite repeated surveys and visits from AGRIA market specialists, Delissa fails to reach 3% of the market in Japan after 10 years of operation.Disappointed by Delissa's poor results, the Swedish management begins to wonder whether they should continue in Japan, change franchisee or pull out.
6HISTORY OF AGRIA 1973 : founded by Swedish dairy cooperatives 1980 : Delissa line was launched1981 : USA launch ,5 % (MS in 2001)1984 : Germany launch 14%1986 : UK launch ,8%1987 : France launch 9,5%1991 : Japanese launch 2%~3%2000 : 2,9 billion sales / 4,400 employees
7CASE DESCRIPTION AND ANALYSIS PROPOSAL for entry into Japanese marketSWOT ANALYSIS base on pre- launch DATAENTRY STRATEGYSITUATION after 3 years and LEADING UP TO 2001
8PROPOSAL FOR ENTRY INTO THE JAPANESE MARKET OBJECTIVESExpected growth rate : 10% or 15% total market5 % first year10% in 3 yearsPositioning : high quality range of yogurtsTarget areas : TOKYO, OSAKA , NAGOYA in 2 yearsRest of the country within 3 years
9SWOT ANALYSIS based on pre-launch data STRENGTHSWorldwide presence : 13 foreign countriesWorldwide known brandPartnership : Nikko2nd largest association agriculture cooperativeLeader various/food productStrong supermarket distribution system
10SWOT ANALYSIS based on pre-launch data WEAKNESSESDependency on local partner : since the franchisee doesn't master very well other languages but their own one (Japanese), Franchiser have to trust and count on locals.Communication between both companiesLanguage barrierCultural barrier
11SWOT ANALYSIS based on pre-launch data OPPORTUNITIES30% household budget allocated to foodIn 1990, total yogurt market : 600 million cupsWesternization of society : interest to western productsIncome is highCulture and distribution of wealth is homogeneous
12SWOT ANALYSIS based on pre-launch data TREATSLow consumption of dairy productsSubstitute : Yakult Honsha / local dessertsUrban lifestyle => shop daily => expect freshnessDistribution system is complex and expensiveCompetitionJapanese manufacturers :Snow Brand Milk Products : Largest manufacturer of dairy product : 25% MSMeiji Milk products : Alliance with Bulgaria government : 2nd largest : 19 %MSMorinaga Milk Industry : third largest, JV with Kraft US for cheeses : 10% MSEuropean brands : DANONE /Yoplait
13THE ENTRY STRATEGY Segmentation Targeting Positioning Drinking milk Eating milk productTargetinghousewives => purchasersCore target : families with babiesYoung children to high school studentsPositioningLuxurious mass communication product« Refreshing nature of Delissa Swedish yogurt; it’s fresh when it’s made at the farm »
14THE ENTRY STRATEGY Advertising Pricing Launch Intensive / short period of timeHigh budget, almost equal to launch in U.S.Channels : TV ads / Newspaper/magazinePricing15% above competitive productsLaunchMarch 1, 1991 => TokyoMay 1, 1991 => Osaka and Nagoya3 types of productsPlain / Plain with sugar / Flavored
151994 DELISSA AFTER 3 YEARS Positive Negative Strong « fashionable » Image2% of the Japanese yogurt marketDistribution should be improvedOrdering system is overcomplicated and slow and is cause of delivery bottlenecksDelivery procedure is too longObserved that small streets and identification system affect deliveriesSmall outlets => small storage => more visit from wholesalersWeak support of sales force : 5% of their timeAdvertising is not successful : messages are too cluttered => low brand awarenessDelissa has not so much differentiation in terms of taste
16DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 PositiveNegativeMarket is largeHigh potential among young populationNikko has the size and manpower to increase penetration by 20002001 : Segment of plain yogurt grown by almost 50% in the past 3 yearsYogurt with jelly and Plain yogurt drink segment are selling wellLess than 3% MS after 10 yearsLow coverage in small cities1998 : Consumer’s brand loyalty is lowLack of real marketing function in NikkoDistribution : cost are high and excessive compare to competitionLow distribution levels1999 : Positioning mistake : “Freshness” concept is wrongLow results in Fruit segment, custard and chocolate puddingUnreliable information from NikkoProduct return is high
17DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 MARKETING SITUATIONMedia planningWrong media planning : target doesn’t match with the broadcasting hoursAdvertising rates are more expensive compared with EuropePositioning : 3 segmentsPlain yogurt : marginal profits on this segment. Advertising concentration with existing brand image would differentiate the product and increase sales, reduce costs and increase profitFlavored : periodic spotFruit : periodic spot, new commercial to stress the fashion concept.
18DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 Brand awarenessPhoto aidedFruit yogourt : Bulgaria > Yoplait > Delissa 71% > DanoneYogourt drink : Delissa – 44 % close to BulgariaBrand Image : Delissa is less desirable than Meiji Bulgaria except fashionabilityYoplaitDanoneDelissaBulgariaUnaided4%3%27%Recall14%16%47%
19DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 Advertising awareness65% could recall something about current ads9% could recalled previous ads55% didn’t know what the company was trying to sayBrandBifidusBulgariaDelissaDanoneYoplait%43%41%36%28%26%ChannelTVIn-store promotionnewspapermagazines%94%6%4%
20DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 Consumption follow-up77% had consumed plain yogurt within the past month
21DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001 Consumption follow-up22 % had at least tried Delissa % for BulgariaPlain category, mainly consumed :First : Bulgaria, second : Bifidus, third : DelissaFruit segmentRankBrand% Consumed1thYoplait10%2ndBulgaria8%3rdDelissa5%4thDanone3%
22CONCLUSION and RECOMMENDATIONS Mangers point of viewsQuestions and recommendationsCONCLUSION
23POINTS OF VIEWS BORG GUSTAFFSON KARLSSON Language problem create frustrationNIKKO was not committed to the development of the Delissa brand in JapanJoint-Venture misrepresented the situation to AGRIAConfusion in positioning and advertisingLeaving Japanese marketLack of knowledge about eating milk and yogurt businessAutonomy issueAccept and trust NIKKOKeep the JV and give more timePoor communication led to mass conflict dataFrequent turnover of managers responsibleParadoxes : Westernization but local taste predominateTaste adaptation : European flavors don’t succeed
24RECOMMENDATIONSAlmost ten years after launching Delissa with Nikko, should Agria cancel its contract and find another distributor ?Considering all the huge previous investments in terms of capital, time, partnership, training, distribution and the existing relationship, Delissa shouldn’t cancel it’s contract.Indeed, the cost of changing distributor would be very high. Rebuilding a partnership with a distributor takes time and considerable amount of money. Training the new team is expensive and take time. It will be mortal, weakened the brand and competition will take advantage of the situationIn addition, considering the weight of the actual partner, it would be hard to find another partnership with the same size. Finally, the problem of language and cultural barriers would remain the same.
25RECOMMENDATIONSShould Agria renew the arrangement with Nikko and continue to try to gain market share ?Agria should renew the arrangement with Nikko. However internal issues must be handle with negotiations and communication because the market potential is there to be taken.The autonomy of the franchisee must be controlled. Strategies must be applied with cooperation. Data conflicts has affect on the effectiveness of action. Terms of arrangement should be redefine and must be clear.
26RECOMMENDATIONSShould Agria admit defeat and withdraw from Japan completely ? Or…was it, in fact, defeat at all ?Agria shouldn’t withdraw from Japan. The opportunities and prospects of the market are promising.The reasons of their “defeat” are organizational and internal issues but also a lack of understanding and adaptation to the Japanese market which led to unfit marketing actions.Indeed, the targeting and positiong were confusing, not clear and not suitable. Many wrong marketing moves were done. However, Agria must learn from experience and corrections can be taken.Finally, the benchmark with the competition shows that Agria is not doing so bad compare to Yoplait and Danone.
27CONCLUSIONAGRIA enter Japanese market in They thought that they would succeed as they did in other foreign countries. They might have underestimate the complexity of the market and didn’t take enough time to prepare their entry.Despite the fact that AGRIA haven’t reach their objectives, they should keep trying to gain market share in Japan with the NIKKO partnership.If their advertisements (advertisement awareness) were somehow effective, there were a important gap between what they wanted to communicate and what Japanese really perceived (brand awareness). The message and their positioning was confusing. With their “fashionable” image they would rather target Young adult rather than housewives or children. Finally, flavors must be adapt to local taste.The internal issues between the both companies created frustration in both sides. In order to solve the problem, they must be courageous and face the issues trough clear negotiations. Effective Information system must be rethink to improve data sharing.
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