In 2011, Charlie and Harry Thuillier developed the idea that health and indulgence should no longer be opposites after eating fresh, nutritious food off the coastline in Brazil (Oppo). Oppo Brothers Ltd. was born in 2013, and Oppo Ice Cream brought the two opposites CPV1 together, bridging the gap between health and indulgence. All four flavors of ice cream are “made from cold-pressed, wild harvested virgin coconut oil, stevia leaf, and fresh milk from meadow-grazed cows free to roam and eat naturally” (Oppo Brothers Ltd, 2017). The coconut oil and stevia leaf dramatically decrease the calorie and sugar content, making it a healthier option certified by the EU. Through the use crowdfunding, they were able to expand as a company, which has since won several awards. The company now sells their ice cream in the UK, Ireland, the Netherlands, Denmark, and in select stores in Belgium, and Denmark (Oppo Brothers Ltd, 2017).
2. Target Country Analysis
2.1 Macro Factors
The suitability of the United States as a potential market was determined through a PESTLE analysis.
Historically, the US was known for its strong democratic republic. The change of leadership from a Ddemocratic party to a Rrepublican party in 2017, however, caused the political landscape to become slightly unstable. President Trump’s preference to bilateral over multilateral trade deals has potential to complicate global trade with the US (The Economist, 2017). For example, withdrawing from the Trans-Pacific Partnership (TPP) has decreased the US’s power, and allowed China to take their place (MarketLine, 2017). Although the current agreement with the UK is unchanged, the additional trade complications of Brexit could cause difficulties.
November 2018 will also hold the midterm wave election, which is predicted to be a Democratic wave (Sen, 2017). If the Democrats are successful in winning one or both chambers of Congress, the new legislations might prevent Trump from any rash decisions.
According to MarketLine (2017), the US economy is one of the most developed systems in the world. The GDP experienced a 3.2% growth in the third quarter of 2017 (BEA, 2017). The employment rate is also at an all-time low of 4.1% in December 2017 (U.S. Bureau of Labor Statistics, 2017). The new tax reform will become effective on January 1, 2018. Reports state that the reform will slightly decrease taxes until 2025 (Cole, 2017). Although there is no official percentage of how much the tax reform would save taxpayers, Figure 1 demonstrates an example of an estimation performed by Business Insider. The largest beneficiaries to this new policy will be large corporations and the top 1% (Cole, 2017). The tax cuts will slightly increase consumer’s purchasing capital. The result of the reform will be a boost in the economy for the first few years and increase national debt.
Oil prices have decreased since July 2017, but they have been slowly raising and are expected to increase into 2018. The Organization of the Petroleum Exporting Countries (OPEC) had a meeting with several producers November 2016 to reduce the output of oil and drive prices up (Wald, 2017). These increases in prices could have a negative impact on how much consumers can afford to spend on luxury items.
Doole et al. (2016) defines culture as the “learned beliefs, values and customs that serve to direct customer behaviour in a particular country market”. CPV2 The results of Hofstede’s study on cultural dimensions regarding the US is demonstrated in Figure 2.
Figure 2 Hofstede’s Cultural DimesionsDimensions for the US
The low Power Distance score combined with thea high Individualism score, shows that Americans value their own achievement and success. High The high masculinity scores represents competition as a driving force in American culture. This, combined with the high Indulgence score, coincides with the individualistic society. Americans treat themselves after all their hard work. This is represented in the consumer behavioer as a justification to buy goods (Schiffman, L.G. and Kanuk, L.L., 2008). Individualism also enables consumers to purchase products that are unique or express personality (ibid). The lLow Uncertainty Avoidance and Long-Term Orientation scores demonstrate that Americans are accepting to innovative ideas, but analyze the information to determine its authenticity (Hofstede Insights, 2016).
The US accounted for the largest share of the UK’s exports in 2016 at 15% (OEC, 2017). The trade barriers that need to be considered by Oppo Brothers are tariffs and quotas. Per the Harmonized Tariff Schedule of the United States, a total of 5,667,846 liters of ice cream may be imported in a calendar year, and there is a tariff of 20% (USITC, 2017).
It should be noted that each state has their own business laws, which could cause complications for those who operate in multiple locations and are not aware of the differences.
When it comes to commercializing technology, the US has protection for intellectual property rights (IPR), which are heavily enforced (MarketLine, 2017). In addition to rapid advancement in STI, theft of IP from countries such as China could make them the new leaders.
The US has many environmental policies in place to protect the environment, but they lack environmental management. This fact became apparent when President Trump backed out of the Paris Climate Agreement. Many companies have taken it upon themselves to maintain environmental standards as part of their corporate social responsibility.
2.2 Micro Factors
The graph below shows the competitors in the Take-Home Ice Cream category and the company shares from 2013-2017.
Dreyer’s Grand Ice Cream Holdings is the number one competitor in the category with 21.9% of the market share (MarketLine, 2017). Some of their brands include Häagen-Dazs, Dreyer’s/Edy’s, Drumstick and Outshine and The Skinny Cow. While Häagen-Dazs has had a value growth of 15%, Edy’s and Skinny Cow have declined the equal amount (ibid). Unilever is the second largest shareholder (14.3%), who owns the brands Breyers, Popsicle, Good Humor, Magnum and Fudgsicle (ibid). All the brands experienced little to no growth in 2016-2017 except Magnum at 13% (ibid).
Halo Top Creamery’s Halo Top brand has increased dramatically in growth and popularity due to the differentiation they offer to their consumers. The product line features 20 dairy and 7 non-dairy low sugar, low calorie, high protein ice cream, all sold in pint-sized portions (Halo Top, 2017). The success of Halo Top has sprouted innovation from competitors, completely changing the ice cream market as we know it. ProYo, a brand who focused on smoothie tubes, came out with their own high protein, pint-sized ice cream (MarketLine, 2017). Unilever expanded their range to include Breyers delights, which are very similar to Halo Top (ibid).
Trends in the market
Small ice cream packs (pint-sized and smaller) are becoming popular because of the convenience for on-the-go millennials and guilt-less indulging. Brands including Ben & Jerry, Halo Top, and Häagen-Dazs have gained popularity for this reason. Brands who add value and differentiation such as a high protein, low sugar, and non-dairy ingredients have impacted the market.
Replacements for dairy milk, such as almond milk or coconut milk, are also changing the market (MarketLine, 2017). Ben & Jerry and Halo Top have already developed some dairy-free, vegan ice cream to account for the need (ibid).
3. Target Market Appraisal
Currently, the Take Home Dairy Ice Cream Category in the United States is worth over $10,419.40 million as of 2016 and sold almost 2,293.90 thousand tonnes in 2016. The category has also had a 3.6% value growth from 2016-2017.
Sales of Take Home Dairy Ice Cream: Value (USD million)
Sales of Take Home Dairy Ice Cream: Volume (‘000 tonnes)
Take-home dairy ice cream experienced the second highest volume growth in the 2016-2017 Ice Cream and Frozen Desserts category at 3.1%, behind bulk dairy ice cream at 3.7% (Passport, 2017). Between 2012-2017, take-home dairy ice cream experienced a growth of 4.3% and is expected to experience an 8.3% growth by 2022 (ibid).
4. Market Entry Strategy
Before entering a licensing agreement, the company will need to apply for the trademarks for the name and logo and possibly a patent. The trademarks can be processed up to five years before entering the US if the business is already operating in another country (USPTO, 2017).
Due to the strong trading relationship with the US, importing the product until the productit gains more popularity and name recognition is CPV3 the preferred mode of entry. President Trump’s erratic views on the current trade agreements, however, could cause potential problems. In addition, Brexit still provides uncertainty for the trading climate in the UK, which may cause additional problems by timeonce the product is ready to be launched. For this reason, licensing is the best option for Oppo.
The most important aspect of licensing is that the licenser maintains control of the product, while allowing the licensee to havehas access to certain knowledge to make an agreed amount of product for an agreed price (Doole et al., 2016). Licensing involves relatively low commitment and eliminates the complications of tariff and non-tariff trade barriers, such as the quota on ice cream. Since the product must stay frozen to prevent perishing, costs of maintaining the temperature are reduced with the decreased travel time. Furthermore, tThe cost of transportation is lower in comparison to exporting as well. As opposed to direct investment, where you one may have your their own factory and employees to manufacture the product, licensing reduces the risk and costs of resources, while by providing economies of scale to the manufacturer (Doole et al., 2016).
Licensing will allow Oppo to produce their product with locally sourced ingredients, which fits the company goals and image while passing that benefit on to their consumers. To maintain the high standards for ingredients, Oppo could partner up with Sweet Meadow Farms as a supplier for the free-range milk.
There is a risk of the licensee not being able to develop the market or eventually becoming a competitor, but there are ways to reduce the risk. Oppo will develop a clear plan with the carefully chosen licensee, supporting the licensee throughout the licensing period, providing the ingredients that will maintain quality, and drafting a comprehensive agreement that includes trade secrets, duration of the contract, percentage of royalties, and the standards of quality expected (Sarathy et al., 2006).
5. Marketing Strategy Recommendations
Objectives are essential to creating an effective strategy plan, by providing the guidelines to determine success. After assessing the market appraisal and the forecasted growth in the category, the following objectives for Oppo Brothers LTD were developed on the foundation that a licensing agreement will be in operation early 2019:
· Create brand awareness for the target market
· Obtain a 1.8% market share in the Take-Home Dairy Ice Cream category by Q4 in 2021
· Achieve sales of 45,171 thousand tonnes and $240,204.60 in 2020
Dreyer’s Grand Ice Cream Holdings Inc. and Unilever Ice Cream’s combined market share of 36.2% CPV4 dominated the Take-Home Ice Cream Category in 2017, with Blue Bell Creameries Inc and Ben & Jerry Homemade Ltd trailing behind at 7.2% and 6.4%, respectively (Passport, 2017). For a new player entering the market, it’s reasonable to assume Oppo’s market share will not reach that of the top four players. Halo Top, on the other hand, managed to attain a 2.6% market share in a three-year time span (Passport, 2017).
The forecasted growth of take-home ice cream in 2020 is to result in $11,334.7 million in value and 2,509.5 thousand tonnes in volume (Passport, 2017). Based on these measures and the goal of achieving 1.8% market share, Oppo would hope to obtain $240,204.60 thousand in value terms (1.8% x $11,334.7 million) and 45,171 tonnes in volume sales (1.8% x 2,509.5 million tonnes).CPV5
A successful market strategy starts by discovering an attractive marketing opportunity and determining the most effective method that parallels the company objectives. Oppo will use Porter’s differentiation strategy to bring its unique products into a wide market.
The Country of Origin Effect is the phenomenon in which a product’s origin positively or negatively impacts the consumer’s perception of the product. Although research shows that many consumers do not necessarily consider this aspect when purchasing most products, it does for certain kinds of products (Doole et al., 2016). Research done by Attest showed that Americans associate British products with quality, and 75% stated they would be more likely to purchase a product if it was made in England (Attest, 2018). Although the product will be licensed in the US, the origin of the brand will be emphasized. The perceived quality combined with the quality of the product ingredients (free-range milk, Madagascan vanilla, lucuma from Peru, African baobab fruit, spirulina from the South-China sea, and Colombian Cacao Fino de Aroma) will turn the product into a quality leader.
The key of creating a translational segmentation is a combination of segmentation strategies (Hassan and Steven, 2005). Demographics, psychographics and behavioral aspects were used to determine the target market. The market includes people between the ages of 20-50 who are part of the middle class to upper-middle class, which is defined to have an income per capita of $40,000-$120,000 (Business Insider, 2017). The two groups of US consumers included in the target market are Undaunted Stivers and Empowered Activists. Both consumer groups assess the balance between high quality and prices, but are willing to spend more on products that are ethically sound or good for the environment (Passport, 2017). The eco-friendly claims need to be from reputable sources to solidify the consumer’s confidence in the product. Purchasing these products make the consumers feel they are having a positive impact on the world, which boosts their personal image. The consumers focus heavily on their personal image and status, which is reflected in their willingness to make non-essential purchases, consciousness about what is being put in their body, and physically active lifestyles. (Passport, 2017).
6. Marketing Mix Recommendations
6.1 Product offering
The international product offer is described by Kolter as having three parts: core customer benefits, the tangible product, and the augmented product (Kolter and Armstrong, 2014). The core benefit would be the guilt-free indulgence. The tangible product is four flavors of low-calorie, low-sugar ice cream with high- quality ingredients. The product attributes are reflected in the premium packaging and brand name. Augmentation of the product would be the transparency of ingredients, quality assurance by Oppo Brothers LTD, and CRM through interaction with customers using the website and social media platforms.
Whether or not a company should follow a standardized, single market strategy or an adapted, more localized strategy for the new market depends on aspects such as legal restrictions and the needs or desires of the consumers. Oppo will be following the “Product extension, Promotion adaptation” product policy, standardizing the product but emphasizing the brand origin in the promotion (Keegan and Green, 2014). Similar to the other markets, the brand name will remain unchanged since there are no legal or cultural reasons to do so. Oppo does not have any specified meaning in American English and therefore does not have a negative connotation. Although there has been adaptation with the language on the packaging in the Netherlands, this will not be an issue in the US market. There will have to be adaptation to the nutrition label in response to the requirements by the FDA (FDA, 2016). The package should also have an excerpt such as “A British Company” under the brand name to emphasize the origin and provide perceived quality.
To achieve a loyal customer base and desired market share in a market with many strong competitors, market penetration pricing strategy would be the best way to enter the market. With economic factors such as low unemployment, a growing GDP, and a high GDP per capita, consumers will have the ability to purchase elastic goods. The average price of a pint of Halo Top ice cream is $4.89 (Fortune, 2018). Since Halo top is the biggest competitor for low-calorie ice cream, Oppo will want to be in the price range of $3.99 – $6.99, starting at the lowest end and increasing prices as market position grows. This market oriented price will be temporary. The price strategy will be re-evaluated after obtaining the desired market share to reflect the more premium nature of the product
The distribution intensity will be selective to health driven channels to build the product brand image. Oppo is currently selling in health food stores such as Whole Foods, Holland and Ocado in the UK (Oppo Ice Cream, 2017). Since the company already has a relationship with Whole Foods, it would logically be the best place to start selling-in. The target market consumers are driven by convenience over cost, so an extending into the Whole Foods selection on Amazon Fresh would be another desirable channel (Passport, 2017). With 69.9% of the major market segmentation being supermarkets and grocery stores, the focus will go towards stocking in grocery stores such as Sprouts Farmer’s Market, and Trader Joe’s that are suitable for the brand (IBIS World, 2017).
The company currently uses social media platforms such as Twitter, Facebook, Instagram, etc. to communicate with their customers. Since the product would not have a large enough presence in the market to advertise on TV, doing inexpensive viral ads through social media could generate enough buzz to create a high demand. Using social media influencers to endorse the product would add another level of digital marketing involvement, and relate to the Undaunted Strivers and Empowered activists who are highly influenced by celebrity endorsements (Passport, 2017). Examples of potential endorsers would be Deliciously Ella, Sarah Philips, Kevin from Fit Men Cook, and even Khloe Kardashian. All of them have high levels of influence in healthy food or exercise. If Kevin or Ella made any recipes with the ice cream, it could be featured on Oppo’s website with the other recipes. Paying the influencers or offering them a free pint as an incentive to endorse the product could be how the product launches to success. Associating with celebrity brands can cause potential problems if the celebrity brand is damaged, so caution is key.
As for promotions in the channels, discounts for buying in bulk could be an effective way to pass on savings to the consumers. Other short-term incentives to stimulate demand could be through free samples at the store. People are significantly more likely to purchase items they are familiar with. Oppo’s current offer of £1 vouchers on their website can be used to draw in new customers, however, converting it to a $1.50 voucher would be a slight adaptation.
7. Evaluation and Measurement
Control is necessary to direct the business operations in a productive manner. By having senior managers assess the progress made by individual departments through the reports of junior managers, structure, defined liability, and a feed-back system will be developed to ensure the success of plan implementation (Doole, 2016). The three steps to this process involve setting the standards, measuring the performance against the standards (such as cost-benefit analysis to consumers), and correcting deviations from the plan (Doole, 2016). The previously stated objectives can be clearly measured, except for creating brand awareness. This could be measured through the achievement of the desired market share. If Oppo does not achieve their goals, a reassessment of the market may be completed to create a new strategy.