Marketing Plan: Greek Yogurt in France

MK 3157 –

International

Marketing

Zompanakis Stylianos – Nearchos

ID: 117740

Instructor: Dr. Giannakoulas John

Spring Semester 2014

Marketing Plan: Greek Yogurt in France


1 | P a g e

Contents

Abstract ................................................................................................................. 2

A. Country Outlook ................................................................................................ 2

A.1. Cultural Environment ................................................................................... 2

A.2. Economic Environment ................................................................................ 3

A.3. Legal & Political Risks ............................................................................... 4

A.4. Relevant Data on Communications & Transportation .................................. 4

A.5. Country-Product Fit ..................................................................................... 5

B. Market Analysis ................................................................................................. 5

B.1. Market Description ...................................................................................... 5

B.1.1. ............................................................................................................... 5

B.1.2. Profile and Consumption Characteristics of Prospective Consumers in

France .............................................................................................................. 8

B.1.3. Market Trends for “FAGE Total 2% au Miel” & Related Products ........... 9

B.1.4. Distribution ............................................................................................ 9

B.2. Competition ............................................................................................... 10

B.2.1. Domestic Competition: ........................................................................ 10

B.2.2. Foreign Competition ............................................................................ 11

C. Marketing Mix ................................................................................................. 12

C.1. Strengths & Weaknesses ............................................................................ 12

C.2. Marketing Objectives & Target Market ...................................................... 12

C.3. Product ...................................................................................................... 13

C.4. Price ........................................................................................................... 14

C.5. Promotion .................................................................................................. 14

C.6. Place/Distribution ...................................................................................... 15

References ........................................................................................................... 16

Appendix .............................................................................................................. 18

MK 3157 – International Marketing

2 | P a g e

Abstract

The purpose of this paper is to present the market potential of a certain Greek product

of unique flavour, namely “FAGE Total 2% au Miel” on the basis of data outlining the French

market characteristics and by presenting the market plan of the product. The analysis goes

through the French business environment and its effects on the marketing strategy concerning the

specific product, the differences between domestic and international strategies, the data on the

French dairy market, focusing on the yogurt segment. Following the course requirements the

paper will only demonstrate an international marketing plan for the product and not a market-

entry strategy.

A. Country Outlook

A.1. Cultural Environment

The structure of the French market points to a classic case of an almost completely

liberalised economic environment in which no less than 65 million consumers play a leading role

in determining its economic, technological and cultural features. Regarding the latter, in

particular, the cultural environment tends to be regarded as being “ethnocentric” to a large

extent, with the French being highly individualistic and the backbone of the French society being

the values of communitarian tone, but in combination to individualistic responsibility (Hofstede,

1988).

Concerning the ties of France and Greece, these has been promoted through the

centuries by the fact that both countries are linked on the basis of historic ties dating back to

ancient history and subsequently building strong cultural, political and educational ties.


3 | P a g e

A.2. Economic Environment

Apart from the general government gross debt which has reached 95% of the GDP,

the overall picture of the French market is improving despite the crisis. The current account

deficit is just 1.5% of the GDP, while the inflation rate hardly reaches 1%.

In addition, according to the World Economic Forum latest annual report (2014),

“France retains a number of clear competitive advantages, including the country’s infrastructure,

which is among the best in the world (4th), with outstanding transport links, energy

infrastructure, and communications. In addition, the country’s business culture is highly

professional and sophisticated (21st in the business sophistication pillar), buttressing its good

position in innovation (19th in the innovation pillar, particularly in certain science-based sectors)

and bolstered by a large market (8th), all of which help to boost the country’s growth potential”.

On the basis of these figures one can safely argue that France has survived, to a

considerable extent, the turbulence of the recent financial crisis and can be regarded as an

attractive market that can absorb top quality products and services (Eurostat, 2014). Thus, one

can safely argue that despite the adverse developments the “ethnocentricity” of the French

consumers mentioned above has been considerably mitigated by the economic, social and

cultural globalisation affecting the French society, a fact that encourages imports, especially

those regarding quality products and services.


4 | P a g e

A.3. Legal & Political Risks:

The possibility that the legal and fiscal structure of the country as well as the

formalities introducing red-tape procedures may hamper the entrepreneurial environment and

discourage FDI flows seems to be rather remote according to the latest (2013 and 2014) reports:

More specifically, the Ease of Doing Business index implemented by the World Bank ranks

France to the 38th

position among 180 countries. In addition, France ranked 22th

among 177

countries according to the in Transparency International’s Corruption Perceptions Index, while

according to the IMD World Competitiveness Scoreboard, the country ranks 28th

among 60

economies.

A.4. Relevant Data on Communications & Transportation

As regards advertising the product this is a rather expensive cost item for the

producer. On top of that, there is a certain amount of legal barriers. To begin with there must be a

very specific structure concerning the advertised product, a structure that requires making

reference, to issues like production methods, ingredients and consumption deadlines.

Regarding transportation possibilities the nature of the specific product, the “FAGE

Total 2% au Miel”, demands air transportation which in many occasions appears to be even

cheaper and obviously less time-consuming compared to all other forms of transportation.


5 | P a g e

A.5. Country-Product Fit:

It appears, therefore, that there may be a good fit of France to the specific product,

namely the “FAGE Total 2% au Miel” in view of the recent Euromonitor (Euromonitor

2013) findings which indicate increasing demand for quality revealing preference for better

and more expensive dairy product variants like “FAGE Total 2% au Miel”. Considering, in

addition, the recent market focus on natural and ecological products, the market globalization

thanks to the Internet as well as the numerous channels of cultural influence between Greece

and France, one can safely argue that the specific product will face no particular difficulties

to prosper in the French market.

B. Market Analysis

B.1. Market Description

B.1.1. Size of Potential Market for “FAGE Total 2% au Miel” in France

The French dairy market grew at a marginal though gradually accelerating rate over

the last five years earning total revenues of $17.9 billion in 2013 and attaining a compound

annual growth rate of 1.2% between 2007 and 2013. The market value for the dairy market in

France is forecasted to record a compound annual rate of change (CARC) of 0.5% growth for the

period 2013 – 2016 (Marketline, Feb. 2014).


6 | P a g e

Market consumption volumes declined with a CARC of - 0.5% between 2007 and

2013 reaching a total of 3,103.2 billion kg in 2013. The market's volume is expected to fall to

3,075.9 billion kg by the end of 2016, representing a CARC of -0.3% for the 2013 – 2016 period

(Marketline, Feb. 2014).

More specifically, the yogurt segment of the dairy market accounted for 16.5% of the

total dairy market value of France in 2013 with a gross value of $2.9 billion. The only two

segments, holding a larger portion of the French dairy market value are the cheese – which is the

largest segment – accounting for 51.2% of the market's total value and the milk segment, which

accounts for a further 20.4% of the market in the same year (Marketline, Feb. 2014).


7 | P a g e

Following the data for the market percentage share segmentation of the French dairy

market, table 4 portrays the situation in absolute numbers, for the same time period.

The most important information though is shown on table 5, which depicts the

situation as it stands in the French yogurt market among the major competitors, in 2013.

The decrease in value terms of the yogurt segment in the French dairy market is not

due to the loss of its market share, but instead due to the withdrawal of the Danone fresh yogurt

brand, Essenssis. After heavy investment, Danone decided in 2009 to withdraw the brand from

the market. Danone reported that due to the financial crisis, their expensive product could not

compete with the other yogurt brands at the budget level of the consumers, thus leading to weak

sales (Datamonitor, 2009). Given that consuming yogurt in France is a daily habit (Marketline,

Feb. 2014), the high price of Essensis made consumers “perceive it as being an expensive habit

that they can easily forgo at a time when finances are tight” (Datamonitor, 2009). This change in

the yogurt market can easily be perceived as a chance for a new product entrance, as space is

being created after the exit of Danone’s brand.


8 | P a g e

B.1.2. Profile and Consumption Characteristics of Prospective Consumers in France:

“Yogurt is more differentiated and highly price - sensitive, as buyers will tend to

opt for the cheaper option, subsequently enhancing buyer power.” (Marketline, Feb. 2014). On

the other hand, manufacturers can develop more individual, premium products, in order to

counter balance the power of any buyer to make purchasing decisions based on price alone.

The target group consists of consumers with preference in health nutrition at a daily

basis. Both sexes are dynamic consumers but elder people have a larger tendency to the need of

healthy food consumption, as well as middle aged, working consumers who wish for a quick,

easy and healthy lunch at work. French consumers are well known for their exquisite tastes and a

premium product with good reputation would surely attract their attention.

In fact, For all health-oriented consumers, “FAGE Total 2% au Miel” is a diet

friendly product, a good source of calcium, protein rich and gluten-free, perfect for consumption

by vegetarians too (fage.eu, 03/04/14).

Finally, one cannot help pointing out that the consumers’ position tends to weaken in

the course of the time, given that the traditional house-to-house delivery system has now been

largely supplanted by conventional retail distribution. “As dairy products are an important part of

most consumers' food and beverage purchasing in many countries, and food retailers are strongly

motivated to stock them, the buying power of consumers tends to weaken” (Marketline, Feb.

2014).


9 | P a g e

B.1.3. Market Trends for “FAGE Total 2% au Miel” & Related Products:

As shown earlier, there is a chance in the yogurt market by the opening which created the

exit of Danone’s yogurt brand. This development, together with the consumers’ profile and

habits, provides a good chance to a premium product to enter the market and capture a share out

of the existing competitors.

From the consumer's point of view, “there is a wide range of food and drink products that

can be used in similar ways to dairy products” (Marketline, Feb. 2014), so if yogurt prices raise

too high, it is possible for consumers to replace them with alternatives. This may lead consumers

to change their diet preferences and habits. The most important issue being that lunch is a daily

routine which is difficult to change back to its former pattern once consumers have decided to

forego the original product.

Given that yogurt is an important part of most consumers' diet, it’s rather unlikely that it

may be completely replaced. Overall, the threat of substitutes is not assessed to be significant.

B.1.4. Distribution:

The main distribution channels in France for the dairy market are supermarkets and

hypermarkets, which account for 66.5% of the market value, followed by independent retailers,

with a significant difference, which cover the 15.1% of the market value.


10 | P a g e

The evidence shown in table 6, point to the fact that the bulk of the dairy products are

distributed through retail channels, allowing no room for introducing an independent distribution

channel for the product.

Yogurt products are perishable, which means that reliable supply and distribution

chains are vital to avoid the costs of wastage, which also explains why yogurt - products storage

costs are high. That is why direct-to-consumer, morning deliveries by the dairy companies,

which used to be commonplace, are now largely supplanted by conventional retail distribution.

The decline of this distribution channel leaves little hope for reversing the trend by integrating

forwards into selling to consumers.

Furthermore, “industrial production of dairy products requires substantial, specialized

assets” (Marketline, Feb. 2014), so the need to sell these off in cases of leaving the market,

translates into high exit costs, which is why the buying power of food retailers is so strong.

B.2. Competition

B.2.1. Domestic Competition:

Table 5 shows the market value share that each of the main competitors holds in the

yogurt segment. All competitors follow the same strategy more or less as analyzed next:

Companies are focusing on increasing brand value, product market share, and

international presence. Leading dairy product manufacturers have strong brands, aimed at

retaining end-user loyalty, which means that a new potential entrance would have to face fierce

competition on this field (Datamonitor, 2009).


11 | P a g e

In the dairy market, small-scale entry of premium dairy products does not require

large amounts of capital. However, for new entrants aiming to challenge the major players in the

mass-consumer market, entry barriers are higher.

Finally, government regulations include laws on food safety, which heavily increase

compliance costs, rendering overall as a moderate likelihood of new players in the French dairy

market (Datamonitor, 2009).

B.2.2. Foreign Competition:

The dairy market in France is dominated by the local companies. Even Nestlé, which

is a Swiss multinational corporation, has established its production – and its French domestic

operations in general – in France and managed by its domestic subsidiary.


12 | P a g e

C. Marketing Mix

C.1. Strengths & Weaknesses

“FAGE Total 2%” is a well branded yogurt in Greece and the US. Also, it’s a

premium, healthy and diet-friendly product. The French market is always open to high-end

products, and in combination to the opening created by the abrogation of Danone’s Essenssis

brand, “FAGE Total 2% au Miel” has a good chance of entering and filling the gap created in the

yogurt market.

It is true though that the French are extremely ethnocentric and very proud of their

language, culture and daily habits. This extends also to their consumption pattern which is richly

endowed with dairy products. The use of the English language on the product or the unnecessary

promotion of the product being imported, instead as being branded as a premium, traditional and

exotically flavored yogurt, would lead to failure.

C.2. Marketing Objectives & Target Market

The marketing objective for the product would be to quickly enter the market through

the retail channels of supermarkets in order to take advantage of the gap which Danone’s brand

created.

For the first year of the product’s introduction the expectations would be to reach a

double digit percent of the market’s value, roughly at $260 - $300 million.


13 | P a g e

C.3. Product

Positioning: “FAGE Total 2% au Miel” is a snack for health-oriented consumers, diet

friendly and a good source of calcium, protein rich and gluten-free and

perfect for consumption by vegetarians. There is no better alternative

solution for breakfast, lunch at work or as a dessert.

Features and Benefits: “FAGE Total 2% au Miel” is offered in a comfortable and safe

packaging, perfect for being carried in bags, backpacks, briefcases or even

by holding it, rendering it the perfect solution as an anytime snack. It will

also be widely distributed through retail channels in order for consumers to

have access to it anytime, anywhere.

Branding: Name: FAGE Total 2% au Miel.

Moto: Our amazingly thick honey paired with our defiantly rich 2% yogurt.

Logo: The worldwide recognizable logo of FAGE with a footnote of how to

properly pronounce the name (FA-YÉ).

Packaging: The packaging will be the same split-pot sold in Greece and the US, which

gives the choice to the consumer to eat a low-fat snack or enrich it with the

nutritious honey to complete the experience. The sole difference would be

the language used on the packaging, which will exclusively be in French.

Labeling: The language used will be French, for all labels, (company and product

name, local distributor, ingredients, nutritional information, expirations date

and storage instructions) except for the company’s logo.


14 | P a g e

C.4. Price

The price will be decided when compared to the premium dairy products that are

found on the same shelves of the supermarkets, in order to compete at the same price range, yet

for the daily budget of consumers who want to ensure a healthy, nutritious snack.

C.5. Promotion

The focus of the promotion will be done through the retail channels, where the

product itself is, through sampling and offers and through the use of banners through the

corridors of the supermarkets which have snacks, cereal and dairy products.

Accordingly, there will be a site for the company and the product exclusively in

French, with no option for another language or any hint of international presence of the product

itself, except for the company.

Furthermore, the product will be advertised through radio and at the subway stations,

when consumers go to work, in order to be reminded of their daily snack at work or the breakfast

they could have every day.

Finally, TV commercials will present the nutritious benefits of the “FAGE Total 2%

au Miel” and focus more on the importance of good nutrition rather than in the product itself.


15 | P a g e

C.6. Place/Distribution

The product will be channeled directly to supermarkets and transported by the local

distributors to all independent retailers. There will be no effort for a forward integration in order

to reach the consumer more safely but there might be distinct refrigerators for the explicit

placement of the product in the supermarkets, or at least the most distinct shelve in the dairy

products section.

Word Count: 2,579


16 | P a g e

References

Bureau of Economic & Business Affairs (2012), ‘2012 Investment Climate Statement’, [online],

Available at: <http://www.state.gov/e/eb/rls/othr/ics/2012/191150.htm>, [Accessed: 04

March 2014].

Dairy Foods (2012), ‘SIAL Reports Strong Attendance, New Products’, BNP Media.

Dairy Industries International (2003), ‘New Cultures for Light Yogurt, France’, EBSCO

Publishing.

Datamonitor (2009), ‘Danone Abandoning Yogurt Brand’, MarketWatch Future Analysis.

Datamonitor (Feb. 2004). ‘Yogurt in France, Industry Profile’, Datamonitor.

Euromonitor International (2014), ‘Market Research for France’ [online], Available at:

<http://www.euromonitor.com/search?txtSearch=france>, [Accessed: 04 March 2014].

Eurostat (2014), Statistical Database, [online], Available at:

<http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database>,

[Accessed: 04 March 2014].

Gauthier, R., et al (2009), ‘Food and Agricultural Import Regulations and Standards. France’,

USDA Foreign Agricultural Service.

Hofstede, G., & Bond, M. H. (1988), ‘The Confucius connection: From cultural roots to

economic growth’, Organizational dynamics.

IMD (2014), ‘The World Competitiveness Scoreboard 2013’, IMD World Competitiveness

Yearbook 2013.

Investment Climate Advisory Services, World Bank Group (2010), ‘Investing Across Borders’,

Washington, 2010.

http://www.state.gov/e/eb/rls/othr/ics/2012/191150.htm

http://www.euromonitor.com/search?txtSearch=france

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database


17 | P a g e

Marketline (Feb. 2014), ‘Dairy Industry Profile: France 2013’, Marketline.

Rajshekhar, G. J., et al (June 2005), ‘An application of the consumer ethnocentrism model to

French consumers’, International Business Review, 14 (3), 325-344.

Schwab, Klaus (2014), ‘The Global Competitiveness Report 2013 – 2014’, World Economic

Forum, pp. 186, 187.

Transparency International (2014), ‘Corruption Perceptions Index 2013’, Transparency

International.

World Bank, The (2014), ‘Doing Business 2014: Understanding Business Regulations for Small

and Medium Size Enterprises’, 11th

ed., Washington, 2014.


18 | P a g e

Appendix

Source: Transparency International, 2014.


19 | P a g e

Source: World Economic Forum 2014 <http://www.weforum.org/reports/global-competitiveness-report-2013-2014>


20 | P a g e


21 | P a g e


22 | P a g e

Source: Global Competitiveness Report 2013 – 2014, France.


23 | P a g e



24 | P a g e


25 | P a g e


26 | P a g e


Documents

Marketing Plan: Greek Yogurt in France