1. Delissa in Japan
Case study of an internationalization of a Swedish company into the Japanese market

2. TEAM R.A.M. Rita.Anja.Michel
Rita Chen MA1N0103
Anja Išek MA1N0206
Michel Sung MA1N0245

3. AGENDA INTRODUCTION CASE DESCRIPTION AND ANALYSIS
History
Abstract
CASE DESCRIPTION AND ANALYSIS
Proposal for entry into Japanese market
SWOT analysis based on pre- launch data
Entry strategy
Situation after 3 years and leading up to 2001
RECOMMENDATION AND ANALYSIS
Mangers point of views
Questions and recommendations
Conclusion

4. INTRODUCTION
Abstract
HISTORY OF AGRIA

5. ABSTRACT
AGRIA, a Swedish milk products cooperative launches its Delissa yogurt in Japan through a joint venture/franchise agreement
At 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.

6. HISTORY OF AGRIA 1973 : founded by Swedish dairy cooperatives
1980 : Delissa line was launched
1981 : 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

7. CASE DESCRIPTION AND ANALYSIS
PROPOSAL for entry into Japanese market
SWOT ANALYSIS base on pre- launch DATA
ENTRY STRATEGY
SITUATION after 3 years and LEADING UP TO 2001

8. PROPOSAL FOR ENTRY INTO THE JAPANESE MARKET
OBJECTIVES
Expected growth rate : 10% or 15% total market
5 % first year
10% in 3 years
Positioning : high quality range of yogurts
Target areas : TOKYO, OSAKA , NAGOYA in 2 years
Rest of the country within 3 years

9. SWOT ANALYSIS based on pre-launch data
STRENGTHS
Worldwide presence : 13 foreign countries
Worldwide known brand
Partnership : Nikko
2nd largest association agriculture cooperative
Leader various/food product
Strong supermarket distribution system

10. SWOT ANALYSIS based on pre-launch data
WEAKNESSES
Dependency 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 companies
Language barrier
Cultural barrier

11. SWOT ANALYSIS based on pre-launch data
OPPORTUNITIES
30% household budget allocated to food
In 1990, total yogurt market : 600 million cups
Westernization of society : interest to western products
Income is high
Culture and distribution of wealth is homogeneous

12. SWOT ANALYSIS based on pre-launch data
TREATS
Low consumption of dairy products
Substitute : Yakult Honsha / local desserts
Urban lifestyle => shop daily => expect freshness
Distribution system is complex and expensive
Competition
Japanese manufacturers :
Snow Brand Milk Products : Largest manufacturer of dairy product : 25% MS
Meiji Milk products : Alliance with Bulgaria government : 2nd largest : 19 %MS
Morinaga Milk Industry : third largest, JV with Kraft US for cheeses : 10% MS
European brands : DANONE /Yoplait

13. THE ENTRY STRATEGY Segmentation Targeting Positioning Drinking milk
Eating milk product
Targeting
housewives => purchasers
Core target : families with babies
Young children to high school students
Positioning
Luxurious mass communication product
« Refreshing nature of Delissa Swedish yogurt; it’s fresh when it’s made at the farm »

14. THE ENTRY STRATEGY Advertising Pricing Launch
Intensive / short period of time
High budget, almost equal to launch in U.S.
Channels : TV ads / Newspaper/magazine
Pricing
15% above competitive products
Launch
March 1, 1991 => Tokyo
May 1, 1991 => Osaka and Nagoya
3 types of products
Plain / Plain with sugar / Flavored

15. 1994 DELISSA AFTER 3 YEARS Positive Negative
Strong « fashionable » Image
2% of the Japanese yogurt market
Distribution should be improved
Ordering system is overcomplicated and slow and is cause of delivery bottlenecks
Delivery procedure is too long
Observed that small streets and identification system affect deliveries
Small outlets => small storage => more visit from wholesalers
Weak support of sales force : 5% of their time
Advertising is not successful : messages are too cluttered => low brand awareness
Delissa has not so much differentiation in terms of taste

16. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
Positive
Negative
Market is large
High potential among young population
Nikko has the size and manpower to increase penetration by 2000
2001 : Segment of plain yogurt grown by almost 50% in the past 3 years
Yogurt with jelly and Plain yogurt drink segment are selling well
Less than 3% MS after 10 years
Low coverage in small cities
1998 : Consumer’s brand loyalty is low
Lack of real marketing function in Nikko
Distribution : cost are high and excessive compare to competition
Low distribution levels
1999 : Positioning mistake : “Freshness” concept is wrong
Low results in Fruit segment, custard and chocolate pudding
Unreliable information from Nikko
Product return is high

17. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
MARKETING SITUATION
Media planning
Wrong media planning : target doesn’t match with the broadcasting hours
Advertising rates are more expensive compared with Europe
Positioning : 3 segments
Plain yogurt : marginal profits on this segment. Advertising concentration with existing brand image would differentiate the product and increase sales, reduce costs and increase profit
Flavored : periodic spot
Fruit : periodic spot, new commercial to stress the fashion concept.

18. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
Brand awareness
Photo aided
Fruit yogourt : Bulgaria > Yoplait > Delissa 71% > Danone
Yogourt drink : Delissa – 44 % close to Bulgaria
Brand Image : Delissa is less desirable than Meiji Bulgaria except fashionability
Yoplait
Danone
Delissa
Bulgaria
Unaided 4% 3%
27%
Recall
14%
16%
47%

19. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
Advertising awareness
65% could recall something about current ads
9% could recalled previous ads
55% didn’t know what the company was trying to say
Brand
Bifidus
Bulgaria
Delissa
Danone
Yoplait %
43%
41%
36%
28%
26%
Channel TV
In-store promotion
newspaper
magazines %
94% 6% 4%

20. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
Consumption follow-up
77% had consumed plain yogurt within the past month

21. DELISSA IN JAPAN SITUATION IN AND LEADING UP TO 2001
Consumption follow-up
22 % had at least tried Delissa % for Bulgaria
Plain category, mainly consumed :
First : Bulgaria, second : Bifidus, third : Delissa
Fruit segment
Rank
Brand
% Consumed
1th
Yoplait
10%
2nd
Bulgaria 8%
3rd
Delissa 5%
4th
Danone 3%

22. CONCLUSION and RECOMMENDATIONS
Mangers point of views
Questions and recommendations
CONCLUSION

23. POINTS OF VIEWS BORG GUSTAFFSON KARLSSON
Language problem create frustration
NIKKO was not committed to the development of the Delissa brand in Japan
Joint-Venture misrepresented the situation to AGRIA
Confusion in positioning and advertising
Leaving Japanese market
Lack of knowledge about eating milk and yogurt business
Autonomy issue
Accept and trust NIKKO
Keep the JV and give more time
Poor communication led to mass conflict data
Frequent turnover of managers responsible
Paradoxes : Westernization but local taste predominate
Taste adaptation : European flavors don’t succeed

24. RECOMMENDATIONS
Almost 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 situation
In 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.

25. RECOMMENDATIONS
Should 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.

26. RECOMMENDATIONS
Should 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.

27. CONCLUSION
AGRIA 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.

28. ご清聴ありがとうございました! Tack för er uppmärksamhet Thank you for your attention !