Universitat de Barcelona

International Marketing (364563)

Supervisor: Professor Xavier Canadell
Group members: Ludwig Rucker, Xinya Feng, Anna Magnusdottir

Global Study Case

Part 4: Entry mode for two of the destination countries

 Product
 Product complexity(+): our products are not complex, it is not difficult to
find another party to make it for us;
 Product differentiation advantage(+): our products are slightly
differentiated from others since our process is different;

 Internal factors
 Firm size(+): our firm is not too big, we just developed competitive
enough to internationalize, so we can not really internalise the process;
 International experience(+): we have limited international experience
due to the previous reason, neither do we have enough budget, so we
should internalise;

 Desired mode characteristics

 Risk averse(-): we are pretty risk averse, so we will externalize to
decrease responsibility if anything goes wrong;
 Control(+): we do not mind about the control as long as it performs well
in the foreign markets;
 Flexibility(-): there’s a relatively low possibility that we would need
frequent manoeuver, so we do not mind about it;

 Transaction-specific factors
 Tacit nature of know-how(+): we know well about the production
process and the market
 Opportunistic behaviour(+) - transaction costs(+): as we internalise the
process we could get profit from the lower cost

 External factors
Spain France

Sociocultural distance between Slightly further, Relatively close,

home country and host but since our product is from we could
country(-) South America and Spain is internalise
closer to S.A.

Country risk/demand Relatively low, Slightly higher,

uncertainty(-) we can internalise we can
externalise

Market size and growth(+) Size slightly bigger Size relatively

Growth relatively slow small
low risk, we can internalise Growth slightly
faster
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 low risk, we can
internalise

Direct and indirect trade Not many barriers, Not many

between barriers(+) we can externalise barriers,
we can
externalise

Intensity of competition(-) Slightly higher Relatively low,

it’s better to internalise to avoid we can
better off competitors externalise

Small number of relevant Not so small, Not so small,

export intermediaries we can externalise we can
available(+) externalise

Part 6: Marketing mix

6.1 Product

When internationalizing, Mates & Mate should focus on basic products, namely those
products that are directly related to the company's brand and thus stand out from
other brands. Thus, the tea varieties of the South American brands should not be
sold in Spain and France. Also because of the rising costs of the tea varieties when
exported. The company purchases the tea from an importer in Germany. If the
company now exports the tea to France and Spain, the costs (transport) increase
and a competitive disadvantage arises compared to traders who buy the tea from
domestic importers, because they have lower costs and can therefore set a lower
price for the products. Furthermore, the prices for mate tea in Spain are very low
compared to the prices in Germany (personal observation). It can be assumed that
the Spanish importers have better conditions than other European importers due to
their longstanding trade with South America.

The branded products to which Mates & Mate should limit itself are:
 Calabash Misiones
 Bombilla Misiones
 Set Misiones
 Cuia Santa Rosa
 Bomba Santa Rosa
 Set Santa Rosa
 Mates&Mate T-shirt
 Mates&Mate Vanilla
 Mates&Mate Mint
We do not consider an adaptation of the products to be necessary, as neither are
they widespread in Germany and therefore in the introduction phase. Therefore, the
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company should try to convince the “carrier” (of the Piggyback Export Strategy) to
carry out a conjoint analysis at its customers to find out how the product range can
be improved.
However, the product descriptions, which are very important, must be translated into
the local language.

6.1.1 The product life cycle

Being not widespread and unknown to many people, our products are still located on
the introduction stage. This means the investment on the promotion and
development of the products is still going up, but we can see that we will make profit
in the coming future.

6.1.2 Brand Identity

 Physique: Mate, tea, South America, health

 Personality: courteous, polite, attentive
 Culture: South American, traditionalism, individualism
 Relationship: proximity connection
 Reflection: healthy, special, friendly
 Self-image: open-minded, cool

6.2 Price

It is important that Mates & Mate recognizes not only the cost structures of products
when setting prices. External and internal factors must take place on the final price
decision. Pricing policy is an important strategic and tactical competitive weapon that,
in contrast to the other element of the global marketing mix, is highly controllable and
inexpensive to change and implement.

6.2.3. External factors

 Environmental factors: they are external to the firm and are uncontrollable
variables in the foreign market, but in our case we don't face too many
challenges since we took it into account before we chose the destinations and
do business from Germany to France and Spain, which is inside the European
Union.
 Market factors: the purchasing power of customers in Spain isn't as high as in
Germany and France while the competition there is more intense, therefore
we would consult our “carrier” (of the Piggyback Export Strategy) to find a way

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 out, either do a high-end Mate or if they can find lower price to import, we can
set our price lower and compete with others.

6.2.4 International pricing strategies

We ruled out penetration pricing strategy since it requires mass markets, price-
sensitive customers and reduction in unit costs through economies of scale and
experience curve effects, which we lack. Also, we cannot use market pricing since
our product is new and unique to our target market. The only possibility we have left
is skimming.
In this strategy a high price is charged to ‘skim the cream’ from the top end of the
market, with the objective of achieving the highest possible contribution in a short
time. For a marketer to use this approach the product has to be unique, and some
segments of the market must be willing to pay the high price. As more segments are
targeted and more of the product is made available the price is gradually lowered.
However, the success of skimming depends on the ability and speed of competitive
reaction. Mates & Mate must bear in mind that:
 Maintenance of a high-quality product requires a lot of resources (promotion,
after-sales service) and a visible local presence, which may require a quantity
of investment we can’t provide for the moment.
 Since the product is sold cheaper at South America parallel importing is likely
to happen.

6.3 Distribution

Typically, an individual or selective distribution is set up for products that are in the
introduction phase of the product life cycle. Since the products of Mates & Mate are
in the introduction stage it must now be decided whether a selective or individual
distribution is chosen. In the following graph, we examine the decisive factors that
influence the choice of distribution.

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Factors such as product type, product life cycle phase, product price, brand loyalty,
purchase frequency, or product uniqueness clearly speak in favour of an individual
distribution. Nevertheless, factors such as selling requirement, technical complexity
and service requirements even speak in favour of an intensive distribution. Thus,
both selective and individual distribution would be conceivable. However, since we
have chosen Piggyback as the export mode, it is advisable to choose individual
distribution in order to build up a long-term, trusting cooperation with the carrier.

6.4 Communication

Firstly, the advertising objective must be defined. Since we do not yet have any
customers in the target countries, we first set ourselves the objective of acquiring
new customers by increasing the awareness of the brand.
Secondly, the budget must be defined. For this purpose, we have to know what sales
promotion strategy we want to use. Since we work together with an intermediary (the
carrier) who sells our products abroad we should not choose a sales promotion
strategy for the consumers, but for the distributor (the carrier). One of those so-called
trade sales promotion strategies is the “Push Money”-strategy where traders (or in
our case the carrier) receive extra payments to be motivated to reach the targeted
objectives. (Pahwa, 2019) Those extra payments can be determined by a percentage
of the profit. We consider 20% of the profit as reasonable. Supporting this, Mates &
Mate itself should try to increase the brand awareness internationally from Germany.

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This brings us to the third step. How do we increase the brand awareness
internationally from Germany? Since we are operating in high-income countries the
advertisement should create a sensory and social brand image. As our main target
group are university students and French and Spanish students do not know or use
the product, the unique selling position should be that mate is the better alternative to
coffee and energy drinks, as the caffeine in mate has a longer and more pleasant
effect. And which channels should Mates & Mate use? Nowadays digital advertising,
especially social media marketing, is the strongest way to promote your brand or
product. (Gotter, 2018) That is why we recommend Mates & Mate to focus on
Instagram, Facebook, YouTube and the own website as their primary promotion
channels. It is very important that the company appears with a corporate design on
all channels and constantly provides customers with emotional content. In order to
attract customers in France and Spain, Mates & Mate should consider collaborations
with French and Spanish influencers on Instagram.

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Reference list

Gotter, A. (2018). The 6 Marketing Channels You Should Prioritize in 2019 | Disruptive
Advertising. [online] Disruptive Advertising. Available at:
https://www.disruptiveadvertising.com/marketing/marketing-channels/ [Accessed 6 Jan.
2020].

Pahwa, A. (2019). Sales Promotion - Definition, Strategies, & Examples | Feedough. [online]
Feedough. Available at: https://www.feedough.com/sales-promotion-definition-examples-
types/ [Accessed 5 Jan. 2020].