Man cannot live by bread alone. He must have peanut butter.
- Bill Cosby
Part 1: Executive Summary
In order to maximize profit, J.M. Smucker could increase sales of Jif peanut butter, its best selling product, into growing markets. Prior to any expansion a full analysis of the market is necessary. The country with the largest market potential for peanut butter in Europe is Germany (ibid 79). The country climate of Germany gives a positive outlook for peanut butter, the primary option being as a breakfast option in the bread spread category. Daily patterns are malleable to suggest that peanut butter be a component, an additive, an ingredient, or a snack.
Jif as a stand-alone brand is a U.S.-based product that has never, through company initiative, introduced any of their products internationally. Therefore there is no past experience in new market expansion. Jif has the branding business model. One main question is whether to copy the previous model for new entry (acquisition) or develop a new strategy that will better align with the targeted market. The target market for Jif in its home market of the US is families with children with the slogan “Choosy moms choose Jif.” Based on the 360 degree profile of customer segments in Germany, the segments were evaluated on margin, persuasion, and volume potential. It was determined that the target market will also be families with children in Germany. Although the target market is the same, Jif will have a very different problem in Germany, getting users to switch to peanut butter instead of Nutella and recognizing alternative uses. In comparison, the primary marketing challenge in the U.S. is getting users to switch from another peanut butter brand to Jif.
The following report found multiple challenges of introducing Jif to a new market, including multiple points of resistance from the target market, such as: association of peanut butter with fatty American foods, current use is only as a bread spread, and entrenched competitors in the bread spread category such as Nutella and Ültje. Peanut butter is more nutritious than the leading bread spread. Peanut butter is high in monounsaturated fats, which actually reduce cholesterol. Peanut butter is also a good source of protein for vegetarians and vegans and is gluten-free and kosher. Therefore, the points of resistance can be addressed by clearly communicating the nutritional benefits of peanut butter as well as alternative uses. Options for alternative uses of peanut butter include integrating peanut butter as an ingredient in cooking. The communication of alternative uses could be through recipes.
The main competition is in substitutes. Although it is identified as a substitute rather than a direct competitor, Nutella, a chocolate hazelnut spread, will be Jif’s primary competition in the German market. Holding 17% of the market share, Nutella is the number one choice of bread spreads. Peanut butter is currently not a large competitor in Germany in the bread spread category, as evidenced by its 1% market share. As a direct competitor, Ültje will present the most aggressive barriers to Jif’s entry. Ültje is a company that has been present for a long time, is locally based, and has a presence in the market due to its well-recognized cartoon figure, jingle, and celebrity endorsements. To combat both competitors the campaign should suggest peanut butter as a complement to the Nutella product. Selecting distributors and developing relationships with value chain members is also a challenge. There are several wholesalers of peanut butter in Germany, which can be used to distribute peanut butter to retailers where consumers can then purchase the product.
In conclusion, while the German market has high potential, it will be a difficult venture into Germany. If the decision is to enter the market some changes will need to be made, but the basic business branding model...