Accompanied by the globalisation the necessity and need for each company to rival on a worldwide level to be able to prevail arises. Hence, increasingly more companies pursue an expansion strategy out of reasons such as product diversification, lower costs, economies of scales and country incentives (Shook, 2008).
Therefore this report will concentrate on the expansion of the sandwich chain Pret a Manger with a special give attention to their market entry in to the Brazilian market. Beneath Russia, India and China, Brazil is one of the BRIC countries and has on the main one hand an extremely developing financial growth and on the other hand a huge customer prospect of the sandwich chain as Brazil has a population of around 185 million (Embassy of Brazil, 2010).
The English sandwich chain was founded in 1986 by the college or university friends Sinclair and Julian and is also headquartered in London, England. Using its 225 shops, which are - amidst some shops in the U. S. and in Hong Kong - mostly located within the united kingdom, Pret has a turnover of around 200 million pounds per year and employs around 4000 people. Their USP is the offering of fresh made food, avoiding preservatives and additives, which sets the business apart from the normal junk food chains (Pret, 2010a).
According to their USP the company collects and distributes the meals that hasn't been sold on that day to charity organisations each night. Moreover the company directs its focus on sustainability concerning food purchasing, packaging, carbon emission, energy, waste and recycling (Pret, 2010c).
When likely to expand globally a company needs to develop a global marketing strategy.
Therefore this report will deal with the analysis of the Brazilian market on the main one hand, including tools such as BERI Index, PESTLE analysis, Porters' 5 Forces and MIS to be able to constitute the attractiveness of the market also to spot opportunities and threats which may arise when entering the forex market (Aaker/McLoughlin, 2010).
On the other hand this report will concentrate on a possible market entry strategy for the companies' products and services that will enable the company to accomplish their objectives and to be successful within the Brazilian market.
Market Analysis
2. 1. BERI Index
The Business Environment Risk Intelligent Index can be an index to evaluate and forecast the political, financial and economic situation of any country for international lenders. The single factors are scaled from zero to four, with zero constituting unacceptable conditions to four constituting superior conditions, and are weighted with their valued importance. Considering the BERI Index of Brazil it can be said that the country, with 61, 5 points, can be classified as an "immature economy with investment potential" (Hollensen, 2007, p. 251).
With a standard score of 10, monetary growth is the highest ranked factor within the BERI Index, as Brazil is a newly industrialized country and has a therefore an enormous growth potential.
The lowest ranked factor is local management and partner because of among others the doubtfulness of corruption (Economist, 2010).
2. 2. PESTLE Analysis
The factors of the external macro environment can be analysed with a PESTLE analysis. This framework includes the political, economic, social, technological, legal and environmental factors, which are country specific and are mostly factors a business cannot control. Changes in the external environment can either depict threats or opportunities for a corporation. Therefore a company that wants to enter a new market must conduct a PESTLE Analysis to be aware of the external circumstances (Nejati et al. , 2008).
For Pret a Manger, likely to expand their sandwich chain to the Brazilian market this report will examine the main success-factors, that are in the context of this company the social, political and economical factors. The three major changes that can be exposed in this context are:
Strong financial growth (BRIC) (Euromonitor, 2009a)
Emergence of wealthier income classes (Datamonitor, 2009)
Orientation towards healthier lifestyles (Euromonitor, 2009a)
The detailed PESTLE analysis can be inspected in Appendix D.
2. 3. Porters' 5 Forces
Porters' 5 Forces is a framework that helps every company to better understand the circumstances when a firm operates, by analysing the five forces that are influencing each industry, ranking them from 1 to 5. The good thing about this framework is that when having analysed the surroundings of the aimed industry and being conscious of the industry structure a corporation can gain competitive advantage when positioning itself according compared to that structure (Grimm et al. , 2006).
Looking at the Brazilian foodservice industry the first point to consider is the competitive rivalry in this particular industry. According to the competitive rivalry Brazil can be rated as strong (4). This is due to the fact that Brazil has an extremely competitive market as there is a strong culture of eating out. Moreover the junk food sector is constantly growing and well-known junk food chains such as Mc Donald's are spreading all over the country and challenge local providers (Euromonitor, 2009a). The risk of new entrants can be ranked as strong (4), as much companies are drawn to the Brazilian market due to the rapidly growing economy. Beyond that entry and exit costs are low, making the market attractive for potential foodservice companies. These days many foreign foodservice chains are entering the Brazilian market which makes the threat of new entrants strong because the middle class consistently rises and for that reason increases the customer base for these companies as well. Overall customers don't tend to stick to a single chain. Home cooking, leisure activities and food retail are substitutes for the foodservice industry. But the risk of substitutes can be ranked as moderate (3) as Brazilians like to eat out (Euromonitor, 2009a).
Regarding the customer power it could be said that switching charges for buyers are low (2) but an individual consumer has only little bargaining power concerning price-negotiation. The supplier power can be seen as moderate (3) as suppliers have more bargaining power than consumers. Besides farmers and food manufacturers staff can be seen as a supplier. As long as labour costs are high in the foodservice industry, which is actually a low-margin industry, staff has bargaining power too.
2. 4. Hofstede
According to Geert Hofstede (2010a) "culture is more often a source of conflict than of synergy. Cultural distinctions are a nuisance at best and often a tragedy. " Therefore every company must specifically look at the cultural distinctions that might occur, when entering a fresh market. Hence, taking a look at the cultural differences between your UK and Brazil is essential for Pret a Manger to be able to react accordingly. Those dissimilarities are depicted in Table 2.
There are significant variations between your Brazilian and the UK culture. Collectivism beats individualism in Brazil and the power distance and the uncertainty avoidance index show that Brazilians prefer rules. These are significant cultural differences and Pret a Manger has to monitor all its steps in Brazil to be able to adjust issues that might occur due to these distinctions immediately.
2. 5. Segmentation
To be able to offer custom-tailored products and services each company, which doesn't want to pursue a mass market strategy, must define market segments to be able to boost the efficiency and effectiveness of their marketing endeavours. Whenever a company is able to specifically align their products and services to the customers' needs it is more likely to record cost savings as there is merely minimal marketing wastage and the involvement of the customer will probably increase that will in the end be a boon to the business (Conrady et al. , 2008). Demographics, psychographics and behaviour are the three areas of the segmentation process. Considering the demographics Prets average customers are between 25 and 45 years, are business women/men with middle to high income level. Around the psychographic side Prets consumer segment has a lifestyle that could be mentioned as yuppie as individuals are active, busy and fashionable. Furthermore, considering the behaviour of the consumers, it could be said that there is a tendency to fast - and convenience food due to too little time. In Prets targeted segment brand loyalty is not high as there are numerous opportunities for consumers to buy food. As the segments of UK and Brazil are identical, this might match Levitt's standardisation approach. But as there are slightly different preferences in Brazil Pret must make local adjustments to fulfil the customers' needs. Therefore Pret must follow a polycentric approach.
2. 6. Marketing Information System
A marketing information system (MIS) is a helpful tool to gather and analyse customer information to aid the marketing planning, by assessing market research data (Armstrong, 2003). Therefore Pret establishes a branch of its marketing research office in Sao Paulo, Brazil. To assemble all the mandatory information the 12 C-Framework can be utilized and its most important points to develop a profile of the Brazilian market (Doole/Lowe, 2008). For instance Pret needs to know more about the consumer behaviour and when and how they prefer to consume sandwiches. Regarding the consumption the business must consider just how many sandwiches they can sell each day per store. Moreover the commitment needs to be assessed respective how the consumers experience the product and if they appreciate the freshness and sustainability of the offered products. Another interesting point will be the choices to evaluate in how far the local taste should be integrated within the menu. The capacity to pay is another evident point as every nationality differs regarding the capacity and willingness to pay. Therefore the Big-Mac-Index could be a good figure to measure this and establish prices in foreign currencies, but Pret must think about whether this index would be helpful for them or whether it wouldn't be better to research a sandwich index. All those questions have to be answered by Prets research office.
Market Entry
3. 1. Objectives
The targets distributed by Prets management concerning the market entry to Brazil are
To create a strong position in Brazil
To establish a regular brand globally in the long term
To gain 10% market share in the first year
To increase sales by 3% year on year for the next five years
To secure permanent profitability
To stay in a budget of 250 million
Business objectives are crucial for every company and an integral for business success.
Their aim is to create targets which every single person can orientate itself, to conduce as a way of measuring success and failure of the company and a standard guideline (Stockton, 1998).
3. 2. Entry Strategy
Pret a Mangers entry technique for Brazil will consist of starting 200 wholly-owned subsidiaries. With this concept Pret is able to navigate and control the complete process and can adapt their strategy if things don't work out the way they have to.
Looking at the store concept Pret will on the one hand establish their common store concept "Local Pret", where there can be an outside area, a lounge, a dining area and a refrigerated self-service counter to provide a second home for his or her customers (Pret, 2010d). On the other hand Pret invented a new store concept called "Kiosk Pret" especially for the Brazilian market, where in fact the food is sold through the window directly to the customer and will be set up in busy areas, where the folks have time constraints. This idea arose out of general market trends, where they discovered that this idea is quite popular and successful in the Brazilian market (Maria Brazil, 2010). Concerning the location Prets Shops will be create mainly in the city centres, shopping centres, in tourist areas near attractions, running a business areas and in airports and stations. As you can see in figure 2 because of their first market entry to Brazil Pret has targeted to open up stores in Sao Paulo, Rio de Janeiro and Victoria as those cities have an enormous population-density (altogether around 55 million) and are the key attraction for tourists.
3. 3. Food and Internal Structure
According to the food supply Pret decided to do local sourcing in Brazil to guarantee the freshness of the offered products for their customers. Which means company must make contracts with local bread, milk and other suppliers. To guarantee the freshness of the offered products Pret establishes two distribution centres, one in Sao Paulo and one in Rio to have the ability to deliver the food just with time. Furthermore Pret will establish a quality control management which is responsible for the operational like the presentation of food, service and food quality.
As Brazilians prefer to eat sandwiches Prets bread range will comprise baguettes, sandwiches and hamburger rolls. Because Brazilians prefer to consume sandwiches in the morning and in the evening, Pret includes one speciality - Feijoada Completa - in their product range which is to be offered at noon. This speciality is a stew of beans with beef and pork meats which really is a typical Brazilian dish. Concerning cultural distinctions it could be said that Brazilians don't like to touch their food yourself (Maria Brazil, 2010). Therefore Pret invented a napkin wrap, so the food is covered and prepared to eat to them without having the chance that they wouldn't buy it. The UK packaging, which is cardboard packaging, will be maintained in Brazil as there aren't any cultural dissimilarities concerning this. Despite the fact that Brazilians know about the overall rate of obesity and are searching for healthier choices (Euromonitor, 2009a) one of the very most famous burgers in Brazil is the "X-Everything", which includes 1300 calories possesses several ingredients such as chicken, sausage, ham, bacon, cheese etc (Ribeiro, 2010). As this isn't a healthy option Pret is likely to succeed with its niche positioning, supplying a product range that represents an improved and healthier option to other junk food chains.
With regard to the internal structure for Brazil Pret will acquire and train the stuff constantly as they have chosen to only enter the marketplace with wholly-owned subsidiaries. Moreover Pret will hire one UK estate manager, who will be responsible for 10 shops generally. To adhere to the law and also to have good working conditions, which also contribute to a good company image, Pret will establish a two-shift system. The opening times for metropolis centre will be from 8 am to 6 pm and shops within shopping centres will be opened from 10 am until 11 pm.
3. 4. Branding
There are four steps of creating a strong brand that are contained within the customer-based brand equity model. This branding ladder has an ordering, which means all the steps are interdependent. It can help to define/describe the brand and really helps to assist the entire brand building process. To attain those 4 steps the business must establish brand building blocks. The most effective block is the resonance as this implies that the client has a great loyalty compared to that brand (Keller et al. , 2008). Those for steps are depicted in figure 3.
If the business wants to reach your goals and to have the ability to reach as many customers as possible they should meld the left hand side of the pyramid, which contains product related associations, and the right hand side of the pyramid, which contains non product related emotional associations (Keller, 2001).
The CBBE Pyramid of Pret is depicted in Figure 5. The Brand identity is approximately the creation of perceptual salience, which should ensure that the consumer is aware of the companies offered products. It's important that the client, when wanting to buy a sandwich, associates Pret with the selling of sandwiches. Prets brand identity is that they can be recognized as a sandwich provider. To create a brand meaning the company must develop an image that stresses the way the brand should be perceived from their target group. This derives either from the performance or the image. The client associations arise either from self experience or advertising. Whereas the brand performance is intended for communicating and providing something that meets and satisfies customer needs, the brand image is more about how precisely people should experience the brand in an abstract way. The brand meaning of Pret is that they are about freshness, health insurance and sustainability. Moreover they deliver good quality, meet convenience needs and also have a reliable service (Pret, 2010b).
If the brand is perceived as unique it supports in the next step a great brand response. As the term implies brand response is all about how exactly consumers experience and respond to the brand which can either happen due to rational judgements or feelings. Consumers' judgements originate after assessing all perceived performance and imagery points like the product quality, credibility and superiority of the brand. The brand feeling is approximately what the client feels, when he thinks of the brand which can among others be warmth, fun, excitement or security. Which means brand response, when the brand meaning is perceived correctly, should maintain positivity in that kind of way that the customer realizes that Pret is a healthier alternative to other fast-food providers because it sometimes appears as unique and credible. If Pret gets this brand response they are able to build a loyal brand relationship using their customers, because they have just a few direct opponents with an identical branding and are able to constantly increase their brand resonance (Keller, 2001).
3. 5. Marketing
To build a favoured brand image Pret has to plan actions of their marketing strategy that are necessary to achieve their marketing goals. The marketing arrange for Brazil is adjusted to local preferences. Therefore Pret signed a contract with Robinho, a famous football player, who will be the endorsement because of their city-light campaign underlining the healthy concept. This campaign starts half of a year before Prets opening to raise people's interest in the brand and the banners will be positioned at top locations. One week before opening Pret will print a full-page ad in the neighborhood newspapers to make people aware of the business's upcoming opening. To increase event exposure advertisements happen on the peak hour commute to and from work fourteen days prior to store opening. Prets event sponsoring will comprise beach soccer, as Robinho is a football player and beach soccer is the most famous sport in Brazil. Regarding the prize and taste promotion Pret will provide free nibbles on the opening day as well as special prices to attract prospects. Moreover Pret is establishing a one-to-one marketing concept to be able to inform folks about new variations of products directly regarding with their preferences.
Branding and Positioning
4. 1. Branding
Despite the product, which really is a tangible asset of the company, a brand is a lot more than that as it compasses the business's values and when established successfully even would exist in the customers minds when a disaster would destroy all tangible assets. In the current competitive landscape in which the products are homogenous, brands are a key point to differentiate the business from its competition and gain competitive advantage by attaining customer loyalty (Armstrong et al. , 2009).
For consumers brands are quiet helpful as they help them to:
identify the foundation of product,
devolve the duty to the company when the product fails,
reduce the perceived risk as the brand guarantees a particular quality
reduce time efforts as consumer can immediately find its brand in the store
function as a symbolic device (Parameswaran, 2008)
The key to success for every company is therefore not and then communicate their brand values to affect the perceptions of the customers but to over-satisfy their expectations to be able to compete in the current highly competitive market (Nilson, 2000).
How important the establishment of a robust brand is can be clarified with the exemplory case of a blind-test, where people where asked to produce a comparison between Coke and Pepsi. Whereas in the blind test the majority of individuals preferred Pepsi (51%) rather than Coke (44%) the open test revealed that with 65% Coke was popular than Pepsi with only 23% (Chernatony et al. , 2002).
This once more underpins the importance of building a strong brand. The advantages for companies which may have a solid brand are they have a risk reduction because they may have an enormous loyal customer base and therefore their future sales and revenues are ensured (Kapferer, 2008). As delineated in chapter 3. 4. branding is about how exactly the business communicates their brand with their customers whereas brand equity is the value that has been ascribed to a brand from a customer's point of view. For Pret a Manger attempting to start stores in Brazil it's important to decide whether they want to build a global brand with or without adaptation. According to Levitt (1983), who is a proponent of the standardization approach, a straight extension strategy by which the same promotion and products are offered globally is the ultimate way to generate economies of scale.
Contrary Aaker (2000) stresses that those global brands that incorporate different cultural needs are regarded as successful, whilst managing to retain an identical brand identity and advertising strategy across all countries. For Pret a Manger the establishment of a distinctive global brand is vital to be successful in the long run as the business wants to further internationalise its business. Nevertheless the company needs to be familiar with the dissimilarities in consumer behaviour according tastes, perceptions, aesthetic preferences to be able to change to different cultural needs in every country to gain market share. As mentioned in chapter 3. 3. Brazilians are aware of their high obesity rate and are trying to find healthier choices. Therefore entering the marketplace with an idea of healthy food options is an excellent choice as Brazilians already are aware of this issue.
Brazilians are proud of there culture simultaneously these are open for foreign companies entering their country as those are connected with better quality for many people residing in BRIC countries. Nevertheless the influence of culture in the meals sector is quite high because they are reflected in local needs and tastes. Therefore Pret adapts their food to the neighborhood needs as stated in chapter 3. 3. and uses Robinho in their advertising campaign to elicit national pride. To successfully extend their brand equity on a worldwide scope Pret builds on the human concern that is omnipresent nowadays: sustainability and healthiness, which helps them to reach consumers irrespective of their cultural background and provides them the additional value of being perceived as a global brand. Due to this Pret is able to be approved at local level, while beyond that having the benefits of economies of scale (Hollis, 2008).
Positioning
Rise and Trout's (2001, p. 2) definition of product positioning emphasizes "Positioning is not what you do to the merchandise. Positioning is exactly what you are doing to your brain of the prospect. " The quintessence of this definition is usually that the "ultimate battleground of marketing" is the prospects mind. When customers want to buy a special product or service they tend to assess the differences between the objects of comparison. Hence, they create a mental picture of the relevant objects of comparison through the allocation of features. This signifies that the single objects are positioned by the prospects mentally (Kotler and Bliemel, 2001).
Therefore it's important for each company to understand the costumers mind to position its brand in the right mode to come first into mind when consumer are thinking about a special product. This is especially important in a period, where information overload is omnipresent and individuals are selective to either take or ignore presented information (Trout, 1996).
According to Trout (1996) the principles of brand positioning are:
Establish a position in the targeted costumers' minds
Provide a straightforward and regular message, which conveys the firms benefits
Differentiate an organization from other companies
Focus the companies' efforts; do not provide everything to all people. (Lovelock et al. ,
2002)
Prets USP is the offering of fresh made food, avoiding preservatives and additives, which sets the business apart from the normal junk food chains and therefore differentiates it with the aid of their products (Pret, 2010a). Moreover Prets customers need not queue because of their products because they are freshly prepared on that day, which isn't common for brands like Subway and Co. ; this strengthens their rapid customer service respective service quality and makes them unique (Sanai, 2001).
Gaining competitive advantage can either be achieved by selling products at a lesser price or by increasing the benefit to customers to be able to charge higher prices. The essential aspect of differentiating a business through the offering of higher value is a company has to provide higher value to be regarded as trustworthy (Kotler and Armstrong, 2010).
Pret pursues latter strategy as their benefit is the offering of healthy and fresh made food; in communicating and putting over the benefit for their new concept, which none of the competitors are selling to that extent, Pret can gain the first mover advantage and charge reduced price (Johnson et al. , 2008).
The positioning map is a tool to visualise the common perception of the target audiences of your company against competitive brands while comparing USPs and position is exactly what the management wants the business to be in the future. In the event the perceived positioning doesn't match the companies desired position it has to communicate this message with the help of the marketing mix (Kotler and Armstrong, 2010).
For Pret a Manger the positioning map is useful as it can help those to reveal their current positioning and its own potential as opposed to rivals. Figure 6 exemplifies the perceptual map for the Brazilian junk food market.
When there are many products on the map regarded as equal some companies have to handle the problem to be a "me-to" product, which can result in the fact that they can never be in the very best of customers minds for the reason that category. It is therefore important to define the category, where you are positioning yourself according to customer needs (for Pret: fresh and healthy food). For Pret a Manger in Brazil it's important to pursue a definite positioning, to be more competitive in the overall fast food sector. The positioning as a healthy option addresses a special target group and can exclude others that aren't interested in that topic. Moreover an obvious healthy positioning can lead to a repositioning of competitors, as they could be perceived as unhealthy (Nilson, 2000).
Looking at the rivals in Brazilian food sector it could be revealed, that there surely is no chain with a standard give attention to healthy and fresh made sandwiches, except minor local stores. The overall trend in Brazil is the investment in healthier food options and the provision of "fast" food as the increase in disposable income and the rising amount of working women causes time constraints and the necessity for balanced diet due to obesity issue. Therefore brands such as McDonalds are adapting their product range and provide salads and wraps. The primary rivals of Pret are: McDonalds, Habib's, Bob, Giraffa and Subway (Euromonitor, 2009b). Looking at the perceptual map it could be said that each fast food chain in Brazil gets the attempt to offer fresher products therefore they are simply regarded as mostly equal in the mind of the customers and for a few it will be difficult to enter into customers mind to begin with. Pret has a unique selling proposition as they provide fast and fresh products and can therefore charge reduced price as they are supplying a perceived added value. To have the ability to maintain that position Pret has to adjust almost all their marketing activities to retain it.
Standardization or Adaptation
The discussion over standardization vs. adaptation of any companies online marketing strategy in international markets originated in the 1980s via an article of Levitt (Kapferer, 2008).
According to Levitt (1983) successful companies pursue a worldwide standardization approach throughout their entire marketing mix rather than customizing it in several countries to have the ability to offer low prices due to economies of scale whilst being "advanced, functional and reliable". Global companies have, according to Levitt, a much better economical performance than those aiming to serve several markets by adjusting their marketing mix. He stresses that consumers' culture steadily converges across markets nowadays and names technology for one of the primary reasons, which leads from his viewpoint to the fact that the whole marketplace is pitilessly homogenized and has common features. In his article he predicts the downfall of multinational firms as global companies, pursuing a standardization approach, that enter the same market will have several advantages against latter.
However, contrary perceptions are represented by other authors. Aaker (2000) and Kapferer et al. (2004) consider that there shouldn't be a definite cut between those two views suggesting that there should rather be considered a combination of both; creating an international brand that incorporates different cultural needs whilst standardizing those parts of the marketing mix it doesn't necessarily have to be adjusted. This underpins the ubiquitous saying "think global, act local", which means that a business can be perceived as a global brand with all its advantages, although acting global and local at the same time to respond to similarities and dissimilarities of their targeted markets which can additionally generate competitive advantage (Kapferer, 2008). Pret a Manger wants to further internationalize its business, but nonetheless they are simply adjusting their marketing mix where perceived as necessary. Which means company follows a polycentric approach and must particularly decide about how exactly to tackle each of the seven marketing mix components (Kotler, 2001).
For Pret adjustments need to be made especially concerning product, promotion and physical evidence whereas the other components are standardized to achieve economies of scale. As mentioned in chapter 3. 3. Brazilians only prefer to consume sandwiches in the morning and at night; therefore Pret serves an area speciality at noon. Moreover Pret adapts their packaging as a result of cultural undeniable fact that Brazilians don't want to touch their food by hand as they might otherwise have to face the problem that they can't sell their products. Concerning the promotion Pret pursues a global promotion strategy, but adjusts to different preferences. As mentioned in chapter 3. 5. Robinho is used as an endorser and event sponsoring comprises beach soccer, as Brazilians favourite sport is soccer to elicit national pride. Whereas the overall promotion is kept low in the united kingdom, it has to be highly expedited to be recognized in this country. Because of the fact that kiosk systems are very successful in Brazil Pret also adjusts their physical evidence by opening kiosk systems as well, which will be a boon to the business as this concept is proofed to reach your goals and is less expensive than normal stores. Since it is important for Pret to attain the best performance, the business has to decide whether to standardize or adapt some the different parts of their marketing every time it enters a new market as the circumstances repeatedly differ. Thus, Pret tries to standardize their marketing mix where possible to save costs to be able to be lower priced than its competition and to invest more into their marketing actions, when entering a fresh country.
Promotion Strategies
6. 1. Communication Model
Before a company starts to promote its products and services it first has to understand the whole communication process. Companies usually communicate to a mass market through chosen mediums and wait the way the consumers respond to that message (Lamb et al. , 2009).
But it's not an easy process as that as figure 7 depicts. This model was published by Schramm and it is the most noted communication model. According to this model there are a number of things involved in the communication process; there is a sender (company) who encodes a note, which means that he converts the message so that it can be forwarded. This message is than transmitted by using a selected medium to the receiver who decodes the message. The message can only be encoded when it involves information that the receiver can bear on, like i. e. familiar symbols. Which means sender must think about how to code a note so that the receiver can decode it and has got the message right. When the message is perceived properly effects can be measured with business figures. If sales don't change something isn't working, meaning the company has to workout what went wrong (Blythe, 2008).
The problem that may appear as the information has been transmitted is the "noise", which accrues externally and can alienate the message. Problems in communication mostly occur due to economical and cultural distinctions between countries (Chee/Harris, 1998). Some of the factors that influence the communication process are illustrated in table 3.
As the effectiveness of the promotion is afflicted by above illustrated factors Pret must involve those in their decision making concerning their promotion and always be aware of the communication process; thus they can change their communication strategy when the response isn't as favoured.
6. 2. Product - Promotion Grid
A company that wants to expand their business geographically must ponder between different strategic alternatives concerning their product and promotion. The decision whether to standardize or adapt the merchandise and promotion can be an important factor as they go hand in hand and can either "create or destroy market in very short order". Cultural dissimilarities play an important role within your choice making process (Hollensen, 2007).
The decisions that can be made lie between a strategy where the company just extends their product and promotion without changing them, to a strategy where both product and promotion are being adapted. The different strategies are illustrated in Figure 8.
The straight extension strategy underlines Levitt's standardization method of 100%. This plan includes the full total extension of both products and promotion without the changes. For this reason strategy companies can gain the most favoured benefits due to economies of scale. This may be good for products/promotion that is perceived equal atlanta divorce attorneys entered market. Nevertheless some product and promotion activities can't be easily extended with the same success as in the country of origin, as culture and therewith preferences differ (Keegan, 2002). Whenever a company discovers that their product fills the need of their target market but serves e. g. a different function than it will pursue the promotion adaptation/product extension strategy, where only the promotion is adjusted to the several needs. The change of a promotional message isn't as expensive as adapting the merchandise (Hollensen, 2007). The 3rd strategy is product adaptation and promotion extension. This strategy is used when the business discovers in their market research that they deal with a possible global segment, but with some different needs. Lastly, a business can pursue the dual adaption strategy which includes neither a standardization of products nor a standardization of its promotion. This plan is pursued if there are major differences, interests in this culture which is the most costly approach (Sandhusen, 2000).
Looking at Prets entry to the Brazilian market it can be explained that they follow a dual adaptation approach as they have to adapt their product (e. g. napkin-wrap) and their promotional activities due to reach your goals within this market. As Brazilians are proud of their nationality it will be a great choice to adapt their promotion by hiring Robinho as an endorser to elicit national pride and therewith increase awareness. As the changes in the merchandise range isn't enormous Pret won't have to invest heavily in that part, which than could also be seen as the promotion adaptation/product extension strategy. Overall they follow a polycentric approach.
6. 3. AIDA
Before a customer purchases a product he must get aware of it. The AIDA-Model is a tool to describe the overall advertising appeal and it is used to illustrate the way the promotion process works. The model comprises 4 levels: attraction, desire, interest and action and depicts what sort of customer reaches know the merchandise until he wants to get it (Lamb, 2009).
In the purchase decision process the promotion takes the consumer through 4 steps. Within the first part - attention - the company must obtain the attention of the target market that can be created through advertising advertisements on TV, Radio etc. Within the next step - interest - the business must lead, by using information and the explanation of product advantages, the target group to a good attitude towards the merchandise to build interest. Due to a differentiation to other products, company information and reliance the product conveys a distinctiveness, which leads to the wish to get the product. Within the last step - action - the consumer should be induced to acquire the product. With this stage the advertisement should further communicate the features and great things about the merchandise to motivate the mark group to buy the product (Clemente, 2002).
Whilst advertising has an effect in later stages of the AIDA model it is most readily useful for gaining attention. You will find other elements of the promotion which are more helpful in some stages of the AIDA Model, that are illustrated in figure 10.
When a firm wants to put its message across it should be alert to the context and diffusion of its target group as this plays an important role in the marketing of global consumer products. Firstly, there's a differentiation between high- and low-context cultures. Whereas the high-context cultures have a concentrate on non-verbal communication and emphasize interpersonal relationships, low-context cultures make their decision predicated on lowdown rather than on intuition and words are taken literally. (Marin, 2010)
This context knowledge is important for a powerful global marketing approach. While in high context cultures interpersonal messages can cause the challenge to receive the right message across, the potency of marketing tools such as print media would tendentially be much higher in low context cultures. Therefore an organization has to do market research before starting their advertising campaign. The second area that should be considered is the diffusion rate. A diffusion rate reveals how inclined societies are to try new products and reveals the speed of diffusion. As both context and diffusion will sway the acceptance of any innovation within a new market there are communication application points of context and diffusion depicted in figure 11 (Paliwoda, 2008).
Brazil can be classified as a higher context culture with an instant diffusion rate. As mentioned in chapter 4. 1. Brazilians are available to foreign companies and their products. Moreover they can be classified as a high context culture as they prefer implicit language and allude to shared encounters in communication (ELL, 2010). Thus, personal selling and influences are extremely important to market new products. Because of the high context rate Pret should further give attention to non written communication. As the diffusion rate is fast Pret has to be aware of their timing. Moreover they ought to distribute their product "via well known" distribution centres, appeal to early adopters and innovators and use a skimming strategy (Paliwoda, 2008).
Conclusion
After assessing the marketplace potential for Pret a Manger in Brazil it can be said that the Pret concept will be very successful in this country. Brazil is a growth market, as the center class increases, the prosperity ascends regardless of the relatively high unemployment rate. Many junk food chains have previously taken the plunge and are now successfully established in the Brazilian market. Moreover there is an ongoing orientation towards healthier lifestyles. By virtue of these factors and the concentrate on a distinct segment market, with a specific differentiation, as well as the establishment in city centres, where there's a relatively high income this concept is indicated to be very successful. Due to Pret's pursued online marketing strategy, which will consider Brazilians rapid diffusion rate and high context culture and will elicit national pride by using Brazilian most famous football player Robinho, the company will gain a solid position in the forex market. The long term profitability will be realised by making use of continuously superior market analysis and quality management, which are essential for the business to react to changing market needs by adjusting to them where considered necessary. The entrance in to the Brazilian market is a further step to determine the brand globally and make it flourish internationally.
