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The development of an international marketing strategy for ZEVIA on the Soft-Drink market in Germany

Bachelor Thesis 2016 168 Pages

Business economics - Offline Marketing and Online Marketing

Excerpt

Table of Contents

Register of Figures, Tables and Graphs

Abstract

Introduction

Theoretical Framework
International Marketing
Influential voices in the academic field of international marketing
Entering a Foreign Market
Relevance for Zevia

Description of the problem/task

Company Profile
Company Overview
The Brand and the Product
Core Consumer
Competitive Advantage
Price
Placement
Promotion

Macro Environment (PESTLE Analysis)
Political Factors
Government Type and Stability
Corruption
Economic Factors
Trade
Import and Sales Regulations
Corporate Taxation
Business cycle and economic growth
Currency
Minimum working wage
Unemployment
Socio-economic Factors
Population demographics
Cultural diversity/homogeneity
Definition of Culture
Hofstede’s Modell - an attempt to compare cultures
Household Income Distribution
Technological Factors
Online retailing
Stevia extraction
Legal Factor
Intellectual Property Law in Europe
Registration Process of new food and beverage products
Environmental Factor

Micro Environment
Stevia as an alternative sweetener
Stevia as a possible solution to obesity
Global growth for stevia products due to its functionality in weight management
Global Market growth for Stevia as a sweetener in Soft Drinks
Soft Drink Market Development in Germany
Increasing Demand of health and wellness products in Germany
Trends on the German soft drink market
Market specifications of the German soft drink market
Recent Beverage Market Developments in Germany

Competition
Competitors in category “natural soft drinks” on German market
Competitors in category “stevia sweetened soft drinks” on German market
International competition for Zevia with focus on US

SWOT Analysis - Examining the market and company features

Exploratory Research
Instruments
Piloting
Sample and participants
Ethics

Overall Results
General Impressions | Overview
Impact
Healthy Lifestyle
Foodstuff Ingredients
Drinking Habits
Buying Behavior
Packaging
Sweeteners (focus on stevia)
Pricing
Taste Preferences

Conclusion
Market implications
Suggestions for Marketing Mix elements
Product
Price
Place
“Opinion leaders”
Gastronomy industry
Convenience Stores
Online (with physical presence)
Supermarkets/Discounters and Vending Machines
Promotion
Website and other online channels
Website
Social Media
Newsletter
Physical Presence as a sponsor
Collaboration with magazines and bloggers

Limitations and Final Recommendations
Research Limitations
Overall implications and further studies

References

Annex 1: Company Profile: Zevia

Annex 2: Corruption Perception Index of Germany

Annex 3: Political Instability Index of Germany

Annex 4: Survey: List of all questions

Annex 5 (Table 13): Suggestions for fairs Zevia could participate as a sponsor

Annex 6 (Table 14): Suggestions for magazines Zevia could place an advertisement or book

an article

Annex 7 (Table 15): Suggestion for Blogs Zevia could collaborate with

Acknowledgements

I would first like to thank my thesis advisor Prof. Maria Paz Menendez Escandon at IE-University in Madrid. It was thanks to her that my thesis is not only a beautiful ending of my four years of undergraduate studies displaying my accumulated knowledge, but also that I was given the chance to acquire more knowledge. She allowed me to individualize my thesis, but steered my in the right direction throughout the process.

I would also like to thank all the people contributing to the piloting of my research survey with their highly appreciated expertise: Daniela, Georg and Sebastian Arnold, Julia Leuchtgens, Susi Luan, Sebastian Broch, Roswitha Wachtler, Michael Fürmann and Lilo Martini. Without their critical voices and active input, the research survey would have lacked some aspects.

I also want to express my gratitude for several institutions providing me with relevant information or linking me to further useful content. I was provided exclusively with a report of the German non-alcoholic beverage industry by Hannah Khan from wafg (Wirtschaftsvereinigung Alkoholfreie Getränke e.V.) accounting for a high amount of my market research.

Other helpful information was provided to me by Barbara Ogrinz employed at VDBD (Verband der Diabetes- Beratungs- und Schulungsberufe). I also want to say thank you to Thomas Grein employed at dfv Mediengruppe and Sabine Reggel employed at Verlag W. Sachon GmbH + Co. KG.

I am also indebted to two experts I want to mention. María Eizaguirre Dieguez helped me to conduct a good segmentation of Zevia’s core consumer in the US. The conversations with Roswitha Wachtler due to her expertise in marketing research gave me several insights and were the input of several ideas elaborated in this thesis.

Most importantly I want to express my thankfulness towards Zevia. It was a great opportunity for me to write a thesis and gain a market insight related to a real life situation. It was Zevia’s success story in the United States driving my motivation and I am grateful for the company insights I received throughout the process of composing this paper.

Finally, I must express my very profound gratitude to my parents for providing me with outstanding support and continuous encouragement not only through my moments of doubt about my thesis, but also during my whole four years of undergraduate studies. I am where I am nowadays because of them. Thank you!

Viktoria Arnold

Register of Figures, Tables and Graphs

Figure 1 Range from Standardization to Adaptation of Marketing Mix Elements; (Source: adapted from Birnik & Bowman, 2007, p. 307)

Figure 2 Various ways of entering a foreign market and their risk/control implications (Source: adapted from Lamb, Hair & McDaniel, 2009)

Figure 3: Definition of Category Zevia in US

Figure 4 Market Growth of Categories relevant to Zevia in US- p.28 Figure 5: Social Media and Website Layouts of Zevia -

Figure 6: Alteration of age distribution among Zevia’s target group (Source: adapted from http://www.bpb.de/politik/innenpolitik/demografischer-wandel/ , 2016)

Figure 7: Households per number of persons in Germany

Figure 8: Labelling of calories and ingredients (Source: adopted from International Featured Standards, n.d.)p

Figure 9: Process of food registration according to the Novel-Foods Regulation (own design)

Figure 10: The life cycle of the German deposit system. (Source: Die Funktionsweise des deutschen Pfandsystems, n.d.)

Figure 11: Voelkl as winner of eve reader price in January 2016

Figure 12: fritz-kola advertisement of 2016 stating "The main thing is that I am awake" (Source: rocketandwink, 2016)

Figure 13: Friendship post on Instagram

Figure 14: Suggestion of Zevia to have their soda for breakfast

Figure 15: Zevia's competitor’s websites (from left to right: Fritz Kohla, Bio Zisch and Lemonaid

Figure 16: Suggestion of design basis for German Zevia website- p.125 Figure 17: Recommended template for online banner

Tables

Table 1: Company Data Information: Zevia (Annex 1)

Table 2: Corruption Perception Index of Germany (Annex 2) - p.151 Table 3: Political Instability Index of Germany (Annex 3) - p.151f

Table 4: Foreign Trade of non-alcoholic beverages in 2012 (Source: adapted from AFG Market Übersicht 2012-2013, 2014) - p

Table 5: Germany’s per capita consumption of non-alcoholic beverages in a European context (Source: adapted from AFG Market Übersicht 2012-2013, 2014, p.26)

Table 6: Comparison of Sales in Germany of Mineral Water holding various attributes for the years 2013-2015 (Source: VDM, 2015)

Table 7: Comparison of Market Share of Mineral Water holding various attributes for the years 2013-2015 (Source: adapted from VDM, 2015)

Table 8: Per capita consumption of soft drinks in Germany between 2009 to 2014 (Source: AFG Marktstatistik, 2012, p. 24)

Table 9: Detailed list of Zevia’s competitors in category “natural soft drinks” on the German market - p.79ff

Table 10: Competitors of Zevia including a stevia sweetened soft drink in their product portfolio - p.84ff

Table 11: Aggregation of Company’s Strengths and Weaknesses and Market’s positive and negative implications (SWOT Analysis) - p.90f

Table 12: Sub-categories of survey

Table 13: Suggestions for Fairs Zevia could participate as a sponsor (Annex 5) - p.158f

Table 14: Suggestions for Magazines Zevia could place an advertisement or book an article (Annex 6) - p.159ff

Table 15: Suggestion for Blogs Zevia could collaborate with (Annex 7) - p.162f

Graphs

Graph 1: Germany’s GDP growth in a European context (Source: adapted from Real GDP Growth Rate - Volume, 2016)

Graph 2: Cultural Dimensions according to Hofstede in US and Germany

Graph 3: Comparison of Revenues of beverages in 2011 & 2012 (Source: adapted from AFG Marktstatistik, 2012, p. 22f)

Graph 4: Development of Production and Revenues of soft drink producing companies between 1992 and 2012 in Germany (Source: adapted from AFG Marktstatistik, 2012, p.28ff)

Graph 5: Development of amount of companies in the soft drink and mineral water industry between 1992 and 2012 (Source: adapted from AFG Marktstatistik, 2012, p.40)

Graph 6: Consumer Price Indices from 1991 and 2015 in Germany (Source: adapted from Preise Konsumerverbraucherindizes für Deutschland Jahresbericht, 2015, p. 22f)

Graph 7: Most favored beverages in Germany in the years 2014 and 2015 (Source: adapted from statista, 2016, Beliebtesten alkoholfreie Getränke)

Graph 8: Proportion of age groups

Graph 9: Proportion of persons per household

Graph 10: Frequency of leisure activities

Graph 11: Importance of healthy lifestyle

Graph 12: Health consciousness

Graph 13: Avoidance of certain ingredients

Graph 14: General Consumption of Beverages

Graph 15: Frequency of consumption

Graph 16: Location of beverage purchase

Graph 17: Preferred packaging for beverages

Graph 18: Satisfaction with stevia as sweetener in beverages

Graph 19: Concerns against Stevia

Graph 20: Low calorie, natural soft drink: Optimum and Indifferent Price after the VanWestendorp method

Graph 21: Preferred tastes for soft drink

Abstract

This thesis represents an in-depth market insight on the German beverage market for the American company Zevia. Considering the theoretical background particularly focusing on the issue of standardization or adaptation of an international marketing strategy, the author suggest in the event of entering the German market to especially adapt 3 out of the 4 marketing mix elements, namely price, promotion and place. Special attention should be drawn to an alteration of Zevia’s promotion and price policies.

However, the German beverage market constitutes a tough external environment for the realization of a market penetration and awareness creation for Zevia’s soft drink. Overall the German market can be described as saturated, diversified and one conferring high bargaining power to supermarkets. All these factors represent an obstacle for Zevia to enter this market, despite the German food and beverage industry being highly receptive to new and innovative products.

This openness derives from the trend detected in Germany (and globally) towards the increased request for health and wellness products. However apparently despite this trend the German market for low calorie lemonades is declining and the perception of stevia as a sweetener is rather negative.

Zevia is recommended to only penetrate the German beverage market under specific circumstances named in this thesis while considering the author’s proposals in reference to its marketing mix elements.

Introduction

The topic of this thesis is International Marketing with all its various implications, influences and theoretical background.

In order to display the importance of the external and internal environment this thesis provides an in-depth market analysis of the German soft drink market for the American company Zevia.

Zevia is a zero calorie soft drink producer founded in Los Angeles in 2007. The company with its formula of stevia, erythritol and monkfruit for deriving its sweetness reports a success story on the American market. Due to the eschewal of sugar and artificial sweeteners the soft drink company claims for its product to be completely natural. Hence it holds some unique features on the market.

This bachelor thesis intends to provide Zevia with an insight into the German beverage market and consequently the author expresses her opinion on whether Zevia should enter the market in the format of a penetration and awareness strategy. In the case Zevia decides to enter even under tough market condition the author provides several recommendations on what aspects in a marketing strategy could be successful on the German beverage market. These are backed up by an explanatory research conducted in the dimension of an online survey targeting the German population.

Otherwise the outcome of this thesis is based on a PESTLE analysis, a Micro analysis, a Competitors’ analysis and a SWOT analysis. All of these were conducted with all possible resources available to the author.

It has to be taken into account that this thesis intends to be a comprehensive information for the soft drink company: Zevia. It is therefore written for readers not being familiar with the European, German market.

Theoretical Framework

In the globalized world of 2016 the necessity to penetrate markets beyond borders is increasing in order to be competitive. Special skills, knowledge and aptitudes need to be developed and implemented correctly to operate profitably in a global market place consisting of 6.6 billion people today and probably rising up to 10 billion by 2050 according to the most recent publications by the United Nations (Doole & Lowe, 2008, p. 4). Competition in the international environment means that companies reach beyond the country they currently operate in and gain global market share among other strategies through mergers, acquisitions, alliances and foreign market penetration.

To complete a successful foreign market entry companies are advised to develop an international marketing strategy. This international marketing strategy will be tailored perfectly to meet the needs and motivations of the consumer in the new market. One example is cultural differences requiring various ways of consumer satisfaction and at the same time meeting the organizational objectives (Doole & Lowe, 2008, p.5).

International Marketing

International marketing can be defined as traditional marketing, but has to be implemented on a larger scale, with an increased amount of uncontrollable elements and a higher uncertainty and therefore more potential risks.

A company aspiring to enter a foreign market has to formulate a new strategy in regards to the marketing mix elements after the conduct of in-depth research on the market it is about to enter (Kotler & Armstrong, 2010, p. 578f). Root defines entering a foreign market as: “an institutional arrangement that makes possible the entry of a company’s products, technology, human skills, management or other resources into a foreign country” (1987, p.5). An international marketing strategy primarily consist of decisions on how to maintain or change the current elements of the marketing mix consisting of (a) brand name, (b) advertising and promotion, (c) product, (d) packaging, (e) pricing, (f) sales and distribution channels, (g) customer service and (h) the online channels (Birnik & Bowman, 2007, p.307).

The common denominator of all these mentioned elements is the relation of the company and the consumer. Marketing first and foremost tells the consumer, why they should buy their product and so does international marketing. Hence international marketing in its intrinsic function can be referred to as a “more complex version” of marketing. Therefore a definition of simple marketing will allow further clarification.

One of the prevalent definitions of marketing by Kotler and Armstrong reads:

“Marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. In a narrower business context, marketing involves building profitable, value-laden exchange relationships with customers. Hence, we define marketing as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return” (Kotler & Armstrong, 2010, p. 29).

Already in the 1980s Marketing Guru Theodore Levitt emphasized the importance of centralizing the consumer to any marketing strategy, in the way that they are key to a profitable business and need to be handled as the most essential stakeholder (Levitt, 1986, p. 7).

Also the official definition by the Chartered Institute of Marketing recognizes customer satisfaction as the main goal of marketing and explains marketing as the “Management process responsible for identifying anticipating and satisfying customer requirements profitability” (Doole & Lowe, 2008, p. 5).

International marketing then has to communicate information/operate across national borders and approach a market/develop a strategy for an unknown environment with an altered set of marketing tools (Cateora, Gilly & Graham, 2013, p.226f). Simplified, implementing international marketing is about analyzing the foreign market beforehand, analyze the marketing mix elements used in the current markets and consequently adjust some of these elements to the new market. This alteration can be implemented through either a standardization or adaptation of all, one or a number of marketing mix elements or sub elements (Birnik & Bowman, 2007, p. 307).

Influential voices in the academic field of international marketing

In a historical context, several academics have presented their views on international marketing and its pan-optimum implementation. Studies and opinions so far have given a wide reaching collection of various approaches on how to enter a foreign market from a marketing perspective (Lim, Acito & Rusetski, 2006).

Overall there have been trends depending on the author and time of publication. To start with, it is of interest to define strategy as “the actions managers take to attain the goals of the firm” (Bennet (2008) in Hussain & Khan, 2013, p. 354).

Firms operating globally usually face two main challenges. They have to respond to an additional foreign market than their headquarters’ current one resulting in the need to conduct internal adjustments to this supplemental external environment. Due to this divergence the academic discussion evolves mainly around both issues (interplay of external and internal environment) and summarizes them in the question, whether and in what circumstances a global strategy of adaptation or standardization is of advantage to a firm to ultimately increase its profit (Hussain & Khan, 2013, p. 356). Upon the decision on the best suiting strategy for implementation, there are three main factors to take into consideration: (1) market, (2) industry and (3) company factors (Loyka & Powers, 2003, p. 69).

Another dissent in the academic sphere is based on the difference in handling either the external or internal environment as the primary independent variable to conclude for the ideal strategy.

Zou and Cavusgil have identified two major theories summarizing this dissent in opinions:

(1) International Organization Theory (IO Theory) and (2) Resource-Based View (RB Theory) (Zou & Cavusgil, 1996, p.52). The main difference in these two theories is their differing focus either on the external environment (IO Theory) or on the internal environment (RB Theory) (p.56).

In the context of determents for a company and a fitting strategy the external environment refers to the outside system, in which the company operates in. This system is said to be well captured in Porter’s 5 Forces. The 5 forces are specified as (1) Bargaining Power of Suppliers, (2) Bargaining Power of Buyers, (3) Industry Rivalry, (4) Threat of New Entrants and (5) Threat of Substitutes (Porter, 1979, p. 141). Hence IO Theory defines the market or industry as the central imperative to direct which marketing strategy will lead to the best outcome for the firm. The firm needs to primarily adapt to the external environment (Zou & Cavusgil, 1996, p. 57).

In their systematic approach to analyze the correlation between the well-performance of a strategy and its adaptation to the environment, Venkatraman and Prescott published the following conclusion: “The results of the tests carried out here strongly support the thesis that the attainment of an appropriate match between environment and strategy has systematic implications for performance” (1987, p. 29f).

In contrast to the IO Theory stands the RB View, focusing rather on the internal environments as an indicator for the best-fit marketing strategy. Internal environment in this context refers to all resources to which a business has access to. In Daft and Barney’s words a “resource” is defined as “all assets, capabilities, organizational processes, business attributes, information, knowledge and so forth, controlled by a firm and enabling it to conceive of and implement strategies which improve its efficiency and effectiveness” (Zou & Cavusgil, 1996, p. 58). Therefore a company needs to be aware of its resources and attempt to develop a strategy that best fits its internal organizational characteristics. Self-awareness in this case is of high importance and represents a possibility to distinguish itself from competitors, in order to derive an overall competitive advantage through an internal organizational/resource-based characteristic (p. 58ff).

Besides the discussion on the prevalence of the external or internal environment as the central imperative for the best implementation of an international marketing strategy, the preeminent discussion evolves around the standardization vs. adaptation of marketing. Early publications of scholars such as Levitt, Kotler and Porter primarily argue for either standardization or adaptation of the marketing mix elements, meaning that they are either implemented as an identical or modified version for foreign markets. Later publications advocate for the necessity to find the right balance and the most relevant independent variables leading to a standardization of some or an adaptation of other aspects in marketing.

Marketing Guru and coiner of the word “globalization” Theodore Levitt (Hindle, 2009) had a very drastic view on international marketing in the sense that he called it “global strategy”. A global strategy should be aspired by all companies, as it is the only way of embracing the possibilities given by the international market (Levitt, 1987, p. 27). In general Levitt argues for global standardization as the only approach to tackle a global market providing some economic benefits. “The implacable truth of all modern production - of tangible as well as intangible products - is that the more standardized product costs less than the less standardized product, and that the large-scale production of standardized products or components is generally cheaper within a wide range of volume than small-scale production” (Levitt, 1986, p. 29).

He emphasizes the importance of competing on price (which can be lowered due to an economy of scale), while maintaining a global identity in quality, reliability and delivery for products (p. 25). His theory is underlined by the understanding of the world as one market place with little cultural differences. Throughout time, and an increasing bond of commonalities differences will disappear step by step and the world will be driven globally by technology and its advancements (p. 39).

Similar arguments for an overall international strategy of standardization due to advantages such as economic scales and consistency in marketing planning action are given by Rutenberg (1982), Henzler and Rall (1986), Jain (1989) and Zou (1997) (Lim, Acito & Rusetski, 2006, p. 502).

While these early authors focused rather on whether a standardization or adaptation of the marketing strategy as single overall variable is most profitable, others emphasized the importance of choosing between standardization or adaptation for a selection of marketing mix elements depending on various independent variables.

Among Douglas and Wind (1987), Ohmae (1989) and Sheth (1986) was also Philip Kotler mentioning government or trade restrictions, cultural, legal, environmental, technological and political differences among countries and furthermore the variance of marketing infrastructure and local management resistance as obstacles for a globally standardized marketing strategy (Lim, Acito & Rusetski, 2006). To clarify at this point a marketing infrastructure is composed of the media availability, the distribution system, legal restrictions, the physical environment and the variation in transport and communication. When defining a marketing infrastructure the two aspects of the competitive environment and diverse market characteristics in terms of consumers are essential for an in depth analysis (Porter, 1986, p. 113f).

In becoming a global player we may identify countries where consumers respond with great similarity towards marketing-mix elements, Kotabe and Murray accredit companies tackling similar markets with a standardized marketing strategy might have some kind of competitive advantage (1990. p. 402f). Considering all these aspects, Grein investigated data on the automobile industry in the five largest Western European markets in a period prior to the Single European Act (1987) (Grein, 2000, p. 172f). He came to the conclusion:

“Companies appear to adapt their marketing mix not only to specific country market conditions, as suggested by Davidson (1982), but also to conditions beyond the single market level, as has been argued by Porter (1986), Prahald and Doz (1987), Bartlett and Ghoshal (1989), and others” (Grein, 2000, p. 184).

The study concluded that certain elements of the marketing mix were more likely to be responsive to similarity, market independence and product-market conditions (p. 184f). The most affected marketing mix elements were prices and advertising. Prices will be harmonized if countries open to free trade, which was revealed to be the only macro environmental force having an influence on the adaption of price (p. 179). Similarly trade has a positive effect on the harmonization of advertising among different markets.

Another factor for advertising to be harmonized was the number of foreign competitors (p. 181). However, it needs to be kept in mind that the study was undertaken in the automobile industry only and might represent an industry-specific outcome.

Another study analyzing advertising standardization in various target markets was undertaken by Harris and Suleiman in 2003. Their geographic area of analysis reached beyond the six largest and most economically developed markets in Europe, as it also targeted three countries in the Middle East. All advertisements of every single issue of women’s magazines were analyzed for a 12-month period. In Europe the magazine to be analyzed was Vogue, while in Greece and the states from the Middle East it was magazines targeting similar readers (Harris & Suleiman, 2003, p. 157f). The study found that a minor percentage of the analyzed advertisement content was completely standardized, but they saw a high level of advertising standardization (p. 166). The authors concluded that the standardization in “advertisement”, one element among marketing strategies can be implemented variably. Whether to employ a policy of standardization or adaptation once again depends on the external and internal circumstances distinctive on the target market (p. 67).

All the studies mentioned support the theory that the main issue in international marketing is the adaptation or standardization of a selection of the marketing mix elements. Therefore the correlation is further established and confirmed. However for the results to be practically implemented by marketers of Multi National Corporations (MNCs) studies need to progressively investigate on the specific situations. Thereupon it should be possible for managers to define “the appropriateness of a particular strategy in terms of its “co- alignment” of “fit” with environmental contingencies” (Katsikas, Samiee & Theodosiou, 2006, p. 868).

After expressing their criticism about various studies being not precise enough in regards to what factors possibly without any exogenous influence lead to either standardization or adaptation strategy (2006, p. 868), Katsikas, Samiee and Theodosiou conducted a study to investigate more closely what factors directly drive standardization strategies (p. 881). Their study primarily focused on the strategic fit of the company’s action and the context it operates in (p. 869). After the analysis of specific product lines manufactured and marketed in the host country (U.K.) and their subsidiaries in the U.S., Japan and Germany they concluded that strategic fit indeed plays a significant role in the success of a standardized marketing strategy:

“Three macro-environmental factors (regulatory environment, technological intensity and velocity, customs and traditions) and three micro-environmental forces (customer characteristics, PLC stage, competitive intensity) are identified as simultaneously affecting the strategic fit and, in turn, subsidiary performance among MNCs” (Katsikas, Samiee & Theodosiou, 2006, p. 883).

In another attempt to find overall guidelines for marketers relating to the specific external and internal environmental aspects preferring a standardized vs. adapted version of the marketing mix elements, Richter analyzed several studies. He thereby focused on the dependent variable (marketing mix elements) and whether a common denominator is evident for Product, Price, Place (distribution) and Promotion (advertisement).

In his book “International Marketing Mix Management” he summarizes the findings. Studies in the time period between 1975 to 2011 found that the product dimension is standardized to the highest extend (Akaah 1991, Codita 2011, Johansson 2003, Levitt 1983, Richter 2011 and 2002, Shoham 1996 and Sorenson & Wiechmann 1975) in (Richter, 2012, p. 28)).

No such consistent result can be found with reference to promotion and advertisement. Companies would prefer to standardize their advertisement campaigns, however predominantly cultural differences urge them to implement a strategy of adaptation. Additionally legal restrictions and the local media infrastructure lead to companies adapting their marketing strategy (Richter, 2012, p. 33).

The marketing mix element of pricing on the contrary is found to be highly standardized due to the interconnectivity of the global market (p. 38). Corresponding to the high variety of cultural factors and market structures the marketing mix element of distribution was found to be hardly standardized (Akaah 1991, Arnold 2007, Czinkota et al. 2004, Kotabe & Helsen 2001, Richter 2011, Terpstra & Sarathy 2000) (p. 42f).

In order to create more feasibility of the discussion between either standardization or adaptation of the marketing strategy, two more dimensions can be added offering options along the line of standardization and adaptation.

illustration not visible in this excerpt

Figure 1 Range from Standardization to Adaptation of Marketing Mix Elements; (Source: adapted from Birnik & Bowman, 2007, p. 307)

As indicated in Figure 1 the two added dimensions are (1) Clustering/Regionalization and

(2) Middle of the Road Strategy. Former is more aligned towards a standardization strategy and hence attempts to cluster markets with similarities approachable with a standardized marketing strategy. Latter dimension holds more elements of an adaptation strategy and hence requires to adapt marketing mix elements on a case-by-case basis (Birnik & Bowman, 2007, p. 307).

Kotler argues for a variance in the extent to which marketing mix elements are standardized and in direct criticism to Levitt’s view on the best option being a worldwide standardized marketing strategy for firms, expresses doubts. He prefers a strategy adopted to national or regional preferences in advance to the market entrance (Kotler, 1986, p.14), also to be called an adapted marketing mix. Such a strategy might lead to a higher market share: “An International Marketing Strategy for adjusting the marketing mix elements to each international target market, bearing more costs but hoping for a larger market share and return” (Kotler & Armstrong, 2010, p. 592). There needs to be a smart assessment of what elements of the marketing mix require adaptation to in the end gain a higher market share (p. 592f).

Porter’s arguments for an adapted global strategy are in essence similar to Kotler’s. While Kotler focusses mostly on the marketing mix, Porter considers the value chain in a global strategy as the indispensable variable to be adapted (Porter, 1986, p. 119). Before looking into details of his theory, it is relevant to mention that Porter distinguishes between (a) a multi-domestic strategy, which should be tailored towards local conditions and (b) the global strategy, which is based on the focus on the value chain (p. 119). The definition of the value chain in a global strategy is related to Porter’s consideration of the competitive scope evident in the four dimensions: (1) the range of segments served by the firm, (2) the industrial environment, (3) the vertical scope (which steps does the firm handle itself and which ones are covered by suppliers and distributers) and (3) geographic scope (regions in which the company operates) (p. 22). Due to the interconnectedness of these four scopes in a company’s upward and downward activities within the value chain, the two key dimension for a company to compete internationally are (1) configuration and (2) coordination.

Configuration refers to the places worldwide, in which the company operates or some activities of its value chain take place. Coordination indicates the inter-relation of these activities in various countries (p. 23).

A firm then has to evaluate every part of its value chain and decide for configuration or concentration as its strategy. Regarding concentration a firm can choose between the range of concentrated vs. dispersed conduction. Concentrated would mean a local headquarter serving the global market from a centralized standpoint. Dispersed on the opposite means that the firm’s activity is performed in every country, in which the firm has entered (p. 25).

Coordination options represent a range from non to many. Firms can decide for example whether or not to leave absolute autonomy to the production plant regarding the steps for production etc. (p. 25).

In reference to this background Porter defines a global strategy as: “There are many different kinds of global strategies, depending on a firm’s choices about configuration and coordination throughout the value chain “(p.27f).

In sum, it is about the right balance between concentrating and dispersing activities as a dependent variable to the industry structure (political vs. economic imperative), “dispersing some activities to allow concentration of others, and minimizing the trade-off between concentration and dispersion by coordinating dispersed activities” (p. 35).

Porter prescribes three main roles for a global marketing strategy: (1) configure marketing activities, (2) coordinate separate marketing groups in different countries and (3) use international marketing strategy to support a firm’s overall global strategy. Firstly a firm has to undertake marketing activities, related to his 4 P’s (Price, Promotion, Place and Product) all around the world (p. 111). Secondly, these marketing strategies need to be coordinated in a way that leaves some aspects to be standardized, while others have to be adapted to the region/nation (p. 112). Thirdly, marketing has to function as a watchdog for new competitive opportunities in other areas, especially in technology development and manufacturing (p. 112).

Zou and Cavusgil have incorporated Porter’s focus on the value chain combined with the two theories mentioned at the beginning, namely International Organization Theory and Resource-Based View. Their model for a global strategy incorporates six major dimensions, which have to be included into a multifaceted course of action. The six dimensions are the following: (1) global market participation, (2) product standardization,

(3) uniform marketing, (4) integration of competitive moves, (5) coordination of value- adding activities, and (6) concentration of value-adding activities (Zou & Cavusgil, 1996, p. 65).

In their later on developed Global Marketing Strategy Framework, Zou and Cavusgil split the variable “uniform marketing” into three diverse dimensions, namely (6) Standardized channel structure and (7) Standardized price and (8) Promotion standardization (2002, p. 43). In order to facilitate the GMS (Global Marketing Strategy) model, the authors divided these eight dimensions into three perspectives.

These three perspectives are called standardization/adaptation, configuration/coordination and integration perspective (Zou & Cavusgil, 2002, p. 40). Each of the perspectives focusses on a distinct aspect of the firm’s environment, while setting the long-term aim of the best firm performance (p. 42). Their model hence tries to incorporate several aspects mentioned in the academic discussion at an earlier point of time proven to have a correlation with a successful marketing strategy (profit maximization) (p. 44). With the development of the GMS conceptualization, the authors claim to have contributed to a more coherent, comprehensive and clear definition of a global marketing strategy and capture the overall “globalness” of a firm’s international marketing strategy (Lim, Acito & Rusetski, 2006, p. 503).

In order to test their hypothesis they conducted a consecutive study in which they found that the GMS does influence the firm’s strategic performance positively in a global market (Zou & Cavusgil, 2002, p. 52). In accordance with the IO Framework and the RB View literature their study implies a high correlation between a firm’s internal and external environment and its degree of globalization regarding the marketing strategy and international experience. They found that previous international experience is a valuable resource for the company to conduct another foreign market entry more successfully (p. 53).

As criticism and an expansion of their GMS model function the suggestions by Lim, Acito and Rusetski in 2015. The criticism was directed at the GMS score assigned to every analyzed strategy, which in some cases would be ambiguous, as it only indicates the global aspect, but does not consider the independent variable and does not show the true multidimensionality of a firm’s strategy. However they embrace the fact that the model takes into account all dimensions being most relevant in literature (2015, p. 503). Their investigation leads them to cluster, on the basis of Zou and Cavusgil’s model, the different degrees of International Marketing Strategies into three archetypes: A, B and C (p. 508). Archetype A, also called Global Marketers, holds the features of having a more concentrated marketing value chain design, most notably in product design/development and advertising and promotional planning functions (p. 508).

Archetype B, also called Infrastructural Minimalists, tends to maintain a standardized approach in regards to brand name and channel design elements, while the advertising theme and sales promotion tactics are more localized. Generally stated, the infrastructural minimalists follow a comparatively mixed standardization policy for its market offerings (p. 512).

Archetype C, also called Tactical Coordinators, includes firms with an interest to localize most of its marketing activities. “Although it is moderately standardized in the area of sales promotion tactics, its product design, advertising theme, pricing policy, and especially channel design are more localized as compared with at least one other archetype” This archetype is highly interested in performing the optimum marketing strategy through coordinating their sales promotion tactics rather than in the standardization of tangible elements (p. 512).

The authors claim to again have brought more clarification into the academic field and their conceptual model incorporates even more literature than Zou and Cavusgil in 2002. However, prospective research needs to clarify the characteristics and implications of all three archetypes more in depth and ergo investigate the evolutionary forces common to each archetype (p. 519).

Finally as Zevia is also an e-commerce business it is important to look at studies and theories targeting this branch. One study conducted by Shama investigated how international the marketing strategies of 136 E-Commerce companies were. E- Commerce is an interesting field as sales in e-commerce amount for an increasing volume of total U.S. sales and easily target two sectors - business-to-consumer (B2C) and business-to-business (B2B) (Shama, 2005, p. 695). The results show that “most companies chose either not to market internationally (31 companies) or not to adapt their marketing mixes to meet the different customer need in international markets (50 companies)” (p. 707). Therefore a rather high disinterest in international marketing was detected which might be triggered through the low level of manager’s education in the implementation of a successful international strategy. Evidence for this disinterest can also be found in the number of companies’ websites being only published in English (47%) and only published in the local language (10%). While the remaining 33% of companies’ websites have shown effort in providing an English and Native language version. (p. 704).

Entering a Foreign Market

Coupled with the prospect of enlarging the pool of eventual consumers companies go global for the benefit in other aspects as well. Among these attainable benefits are (a) minimized costs through economy of scale, (b) a proprietary learning effect in its activity, (c) comparative advantage in the specific activity in one or several of the additional locations, and (d) comparative advantage in other linked activities such as R&D and production through locating these areas into the most inspiring environment (Porter, 1986, p. 29).

In order to exploit these possibilities companies take risks related to it and enter new markets.

Tapping into a foreign market is often connected with among others political and economic risks representing an uncertainty for the company as they often vary from the circumstances it currently operates in (Rasheed, 2005, p.45).

Depending on the approach, these uncertainties have been characterized in two different manners, namely either in behavioral uncertainty (including cultural uncertainty) or endogenous/exogenous uncertainty.

Former refers to uncertainties deriving from the company’s activities in a new and unknown market and latter refers to uncertainties beyond the reach of companies, as they are externally steered (Ahsan & Musteen, 2011, p. 380f).

Behavioral uncertainty approached by literature summarized as the Transaction Cost Theory needs to be controlled through a fitting entry strategy. Endogenous/Exogenous uncertainty approached by literature categorized as the Real Options Approach depends on how much control a firm could gain over the specific uncertainty (p. 387). Endogenous uncertainty can be actively tackled by the firm, while exogenous uncertainty can only be minimized or resolved through passive observation (p. 382). Depending on the share of either endogenous or exogenous uncertainty, a different entry mode will lead to the most successful outcome (p. 384).

As a result it is necessary to carefully identify the best strategy on how to enter a market. Overall there are two approaches to tackle this issue. One is to gradually enter the market and thereby step by step tapping into one foreign market after the other. This approach is called the waterfall approach.

The other approach requires firms to enter several markets at the same time and hence they often start operating on a global level right away. This approach is called the sprinkler approach and is often used by technology-based firms when the first-mover advantage is greater (Kotler & Keller, 2012, 598).

For a company deciding to go global there is a variety of choices on how to pursue this step. The strategic entrance of a company into a foreign market includes the following options, ranked here according to the commitment, risk, control and profit potentially involved, starting with the least involvement: (1) Indirect exporting, (2) Direct exporting, (3) Licensing, (4) Joint Ventures and (5) (Foreign) Direct Investment (p. 603).

Common features of these 5 market entry modes are to be found in the performance outcome. Evidence has shown that regardless the applied entry mode, internationalization of a firm through any foreign entry market significantly raises returns on sales and assets (Rasheed, 2005, p. 43).

illustration not visible in this excerpt

Figure 2 Various ways of entering a foreign market and their risk/control implications (Source: adapted from Lamb, Hair & McDaniel, 2009)

Depending on the engagement reflected also in the intensity of control of the home company, the various ways of entering a market hold higher or lower risks. However when higher risks are involved the potential of profit return is greater. Therefore it is tempting to be highly involved (Levy & Prakash, 2003, p. 140).

Nevertheless depending on the degree of control on tangible and intangible resources and the transactions costs for resources, foreign market entry is conducted in various ways (Rasheed, 2005, p. 42).

Indirect Exports include several option on how they can be conducted strategically. All of these have in common that the process of exporting is conducted through external, independent intermediaries. This relative distance towards the foreign market gives the company the chance to not be directly and heavily influenced by political and economic changes in the market. Either the deal can be cut completely and the MNC can exit this market or they can change their intermediary for the market. A company deciding on entering a foreign market through indirect exporting gains two advantages, namely less risks and less investment costs (Kotler & Keller, 2012, p. 603).

Direct exporting is said to be slightly more risky, as the company handles their own exports and therefore is more involved in the market activity. Direct exporting includes domestic-based export departments or divisions, overseas sales branch or subsidiary, traveling export sales representatives or foreign-based distributors or agents (p. 604). The next step to be integrated in a foreign market is licensing. Licensing can vary in its precise execution, however it is basically a permit given by the licensor to the so-called licensee for the application of the licensor’s trademark, patent, manufacturing process, trade secret or any other valuable knowledge/brand that can be protected by intellectual property (p. 604).

Joint-Ventures are an entry mode that on the one hand gives more control and power to the home company, but also includes more diverse risks and uncertainty. Basically a joint venture is the integration of two firms or parts of them to eventually share ownership and control while often gaining a competitive advantage out of the merger (p. 605). This method is especially used for the emerging markets resembling China and India. The most engaged and risky way of entering a foreign market is by conducting a direct investment. A direct investment can represent either the complete or partial acquisition of a company operating locally in the market to enter. Besides the company has the possibility to actually construct its own manufacturing or service facilities (p. 605).

Foreign Direct Investment vests a firm with the power to have complete control over the operations in a specific foreign market. It is primarily used by companies that have the intention to enter a market on the long-term and that are associated with a technology upgrading process. Another specific characteristic for Foreign Direct Investment is its attractiveness to domestic policy makers, who often invite companies to conduct a Foreign Direct Investment with tempting low taxes (Levy & Prakash, 2003, p. 140f).

A different approach on how to best enter a foreign market was taken by a study investigating the usefulness and relevance of the E.P.R.G. framework for company’s orientation toward an international strategy. This framework focuses mainly on the internal possibilities for a company to enter foreign markets.

The abbreviations of the framework stand for Ethnocentrism, Polycentrism, Regiocentrism and Geocentrism. As the name implies this model provides implications of how the company views the global market in combination with its abilities and expertise (Wind, Douglas & Perlmutter, 1973, p.14).

The Ethnocentric view holds that the local staff is best educated and skilled to operate in a foreign market. The Polycentric view centralizes the foreign market into its business operations, meaning that a high integration of the foreign labor market into the daily business operation takes place (Blom, 2002, p. 17). Due to the employment of local personnel an issue with coordination and control might emerge (Wind, Douglas & Perlmutter, 1973, p.14).

Regiocentrism leads to the company’s focus on regional diversities and the consecutive design of regional strategies. Geocentrism tries to overcome any distinction between nationalities and attempts to decide on its employees according to their skills rather than their cultural background (p. 15).

In their study Wind, Douglas and Perlmutter asked 40 international key executives of one large U.S. firm, what marketing policy the firm currently uses and which one describes the most appropriate future strategy for the firm (p. 16). In the process of their investigation they realized that the variables as in the firm’s size, the experience in overseas market and the degree of heterogeneity of the potential market will be crucial for the company to pick its strategy. Their conclusion leads to the relevance to consider of both: the level of international orientation as well as the degree of market orientation as a helpful guideline:

“The level of international orientation determines the firm’s desired level of involvement in international operations and the appropriate unit of analysis for developing marketing policies, i.e. by region, country or world. The degree of marketing orientation, on the other hand, determines the specific analytical approach to be used. Regardless of the level of international involvement, a company’s international operations should always reflect a high degree of marketing orientation” (Wind, Douglas & Perlmutter, 1973, p. 22).

For them the most important guideline is the individual assessment of the company itself, while focusing on its marketing strategy, to find the most appropriate degree of international orientation to fulfil the aspired market share and market objectives (p. 22).

A different approach than focusing on the internal configurations (employment of local vs. foreign employees etc) when entering a foreign market is analyzed by Grein. In his research he focused on the correlation of the independent variables of the degree of market similarity and the extent of interdependence and the dependent variable of variation in marketing strategies (Grein, 2000, p. 168). In order to follow his analysis the distinction between similar and independent markets has to be drawn.

Douglas and Craig name two components on how to measure the interconnectedness of two markets. First it needs to be analyzed, how linked the markets are (trade, common customers and competitors, effects crossing the national borders among these two markets) and how similar markets are. The similarity is implicated by similar consumer tastes, interests of purchasing behavior, but also legal and technological factors (Douglas & Craig, 1996, p.96f). The market similarity is then complemented by market interdependence, triggered through globalization (Grein, 2000, p. 169f) or in other words market interdependence (through tourism, scientific exchange, trade, population movements etc.) will cause for the markets to assimilate.

Grein then postulates the theory that market similarity and interdependence will lead to a higher standardization of the marketing strategy. The roots for this are visible in the fact that companies will feel less need to adapt their marketing mix to cultural differences due to them being detected as a diminishing factor (p. 171).

Relevance for Zevia

The purpose of this thesis is to develop an international marketing strategy for the American based company Zevia. The market of interest to Zevia is the German soft drink market and the product with which such a penetration and awareness creation should take place is called the same as the company, Zevia.

As Zevia’s product will cross the ocean and will be implemented in a European country all the factors mentioned in the theoretical framework are helpful for tailoring a marketing strategy. Considering the internal environment, namely the company Zevia itself, as well as the external environment, namely the market specifications of the German soft drink market is required.

The analysis of the literature review has shown that successful marketing strategies represent strategic choices in terms of which of the marketing mix elements to standardize and which ones to adapt.

In Richter’s connection of several empirical studies the tendency that price is the most standardized factor, while distribution, advertisement were mostly found to be adapted. However, it has been evident that among academics there is no such thing as a uniform formula defining the strategic fit of standardization or adaptation of certain marketing aspects. A successful implementation for Zevia will consequently depend on a well conducted market and company (internal and external) analysis to create an individual recipe for a successful, hence profitable international marketing strategy.

Description of the problem/task

Zevia is completely unknown to the European market, besides the soft drink market in the UK, where some products are offered. However entering a market driven by a health trend might enable Zevia to have a fresh start and to be established on Europe’s largest retailing market in terms of buying power. Germany, representing a strong business location due to its GDP (Gross Domestic Product) and amount of inhabitant measured above the European average and it being an import friendly country. Therefore the market seems to represent a good opportunity to reach overseas and take advantage of all benefits of going global.

In order to establish Zevia on the German soft drink market the business objective is to conduct a profitable implementation and the marketing objective can be named as a market penetration. A market penetration is necessary in cases of markets not being saturated with a company’s product or service and when the rate of usage of present consumers has not reached its limit yet (David, 1986, p. 64). The marketing objective of penetration has to be accompanied by creating market awareness of the product Zevia, as the challenge will be to attract completely new consumers on the German market. For a successful creation of awareness a precise and in depth market segmentation is of advantage, as it allows for targeting the consumers at the right time, through the right media with the right message (Fortini-Campell, 2001).

The main issues for Zevia will be to gain insights of the German soft drink market and thereafter decide where it should position itself: this might either be on a niche market or as a drink to be bought in the supermarket with a mass placement strategy. However, several factors will represent severe obstacles, to be found in both - internal and external aspects. The European Union is known for its strict laws in the food industry and Germany is no exception, but rather takes the legal restrictions to the next level, guaranteeing complete food security to their population. The German soft drink market is already quite saturated and Zevia needs to explore whether their product would prove popular.

In regards to internal aspects Zevia will face linguistic and cultural barriers, as these differ from the one at the head quarter.

These contrasting characteristics will lead to inevitable adaptations of the marketing mix elements. In relation to the product it is questionable, whether German consumers would identify themselves with a stevia sweetened soft drink, whether the tastes need to be altered, the packaging needs to be adjusted and whether the flavors of the product is accepted. Besides product specific aspects, Zevia will have to decide upon either producing locally (in a German manufacturing and bottling plant) or abroad and bear the higher logistic costs.

When it comes to the issue of pricing Zevia will have difficulties to stick to its current price of €4.5, as the German market is highly saturated leading to a competitive environment. Consequently Zevia has to orientate its price policy towards the ones on the market. Depending on their discount policy, Zevia should ensure that their prices are aligned and not perceived as overly expensive, despite positioning itself on the upper price scale. Also in reference to the price the question of whether the market being predominantly a B2B (business to business) or a B2C (business to consumers) market it is important to know the market power of retailers or end consumers.

The marketing mix element of place has been shortly mentioned, however more precisely Zevia is forced to decide upon its positioning among others in the health section, comprised of pharmacies, drug stores, etc., or mainstream market, comprised of supermarkets, convenience stores, gas stations, etc. or the high quality section, comprised of restaurants, bars, promotions for luxury goods, etc. Depending on the perception of the German population of Zevia and its features the best suiting positioning will be defined.

Lastly in terms of promotion the current marketing campaign needs to be analyzed in terms of its convertibility to the German market in an either standardized, adapted or inbetween way format. As the research will point out several fundamental aspects in the American and German business environment (internal and external) for Zevia the decision has to reflect upon these.

Company Profile

Company Overview

Zevia is a privately owned company founded in 2007 by Derek and Jessica Newman and Ian Eisberg. Its headquarter is based in Los Angeles, but the company under the name Zevia LLC distributes its products in the US, in Canada and in some parts of the UK. The company is specialized in zero calorie carbonated soft drinks of 15 different flavors. The product portfolio comprises not only the “standard” Zevia in 0.355l cans, tall girls and glass bottles, but also sparkling wines in the taste pear and apple in 0.75l glass bottles. More information on the company is found in Table 1 in the Annexes.

The Brand and the Product

Zevia as a brand promotes its products in the Category of naturally sweetened, sweetened zero calorie carbonated soft drinks (CSD). The products are sold under the identical name of the company: Zevia.

Zevia offers naturally sweetened zero calorie CSD in 15 different tastes. These tastes are (1) Ginger Root Beer, (2) Dr. Zevia, (3) Grape, (4) Black Cherry, (5) Grapefruit Citrus, (6) Strawberry, (7) Orange, (8) Cream Soda, (9) Lemon Lime Twist, (10) Mountain Zevia, (11) Ginger Ale, (12) Cola, (13) Cherry Cola, (14) Caffeine Free Cola and (15) Tonic Water.

The ingredients of the sodas are: Carbonated Water, Erythritol, Citric Acid, Reb A (Stevia Extract), Natural Flavors and Monk Fruit Extract. Depending on the product it can also contain caffeine, various acids and oils. The sweetness comes 81% Stevia, 15% monk fruit and 3% erythritol.

The product portfolio contains further a line called “Celebrations”, consisting of Sparkling Pear and Sparkling Apple - two zero calorie, non-alcoholic beverages - in the format of sparkling wine bottles with besides the aroma the same content as the Zevia sodas. To be able to exhaust the segmentation of Zevia in the US in the best possible way, it is important to understand the category and to have a precise definition thereof. After the analysis of the category it is necessary to use the segmentation method after the Kellogg School of Management to understand Zevia’s current core consumer in a way useful for a successful marketing campaign.

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Figure 3: Definition of Category Zevia in US

The category Zevia falls into can be determined as “zero calorie carbonated soft drinks with natural sweeteners”. In the US Zevia holds a market share of 81% in its category. The growth structures of the subcategories relevant to Zevia are composed as 7.9% growth for zero calorie soda, among which the market growth for the ones with natural sweeteners is 47.9%. The category Zevia is operating in is a strongly growing and demanded one with a prosperous future outlook in the US.

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Figure 4: Market Growth of Categories relevant to Zevia in US

After the understanding of the category Zevia operates in it is important to become more familiar with the messages the company communicates.

Zevia includes in their mission to enhance wellness and health. Their soda, enjoyable for the whole family, does not require the consumer to make a sacrifice. With Zevia they should feel good about their soda choice, as its sweetness derives entirely from natural sweeteners and holds zero calories.

Core Consumer

The segmentation is based on the method according to the Kellogg School of Management and Fortini-Cambell’s publication “Hitting the Sweet Spot: How Consumer Insights Inspire Better Marketing and Advertising” As no actual data of the American consumer is available the segmentation in this thesis represents a starting point and an interesting method to implement segmentation for the best fit marketing strategy. This method evolves around complete consumer centricity. Therefore the basis for defining a Marketing Challenge is an in-depth consumer profile and summary, including the following aspects of the consumer: (1) Lifestyle, (2) Relationship of consumer with product or category, (3) Media Habits, (4) Delighters/Satisfiers (5) External Influencers, (6) Values, (7) Demographics and (8) Motivations (Eizaguirre-Dieguez, 2016).

The approach divides all consumers into three main sections, of which one holds two sub- categories. The three main sections are (1) Core Consumer, (2) Rest of Consumers (buy you occasionally or not) and (3) Growth Groups. The last represents possible groups, which each holds the same identified characteristics and are therefore tangible for the brand. The group whose motivations and needs can be leveraged the most is called the SVC - a group which the brand needs to serve to keep growing its market volume.

In order to find possible growth groups it is important to have a precise definition of the core consumer. However, as Zevia is entering a completely new market it should probably reflect upon its American core consumer and target a similar group on the German market.

As a rule the data on which segmentation and consumer profiling is based derives from field investigations. Due to the impossibility to conduct such a large scale analysis and the difficile access to consumer data the analysis is not complete and only based on demographic data given by Zevia and investigations of social media behavior of current consumers.

Every segmentation is built up on three pillars (1) Demographics, (2) Behaviors and Attitudes and (3) Motivations and Needs (Eizaguirre-Dieguez, 2016).

Demographics

-Millenials (30.2%) 15-35 years old (= 92 million in US), includes especially households with older children, young couples and college graduates
-Strong income skew (>$ 60 k household income vs. US median household income of $ 53k)
-US mainly, but also Canada and UK
-Both sexes, but primarily women

Attitudes and Behaviors

-Self-expression and individual attitude are very important
-Healthy/active lifestyle with the consciousness to constantly fulfil this requirement
-Cooking is perceived as a way of self-expression
-Experimental in the sense to go out of their comfort zone to do the best for their body and embrace the chance to find others to take the step with them
-Quality of a product is extremely important. Quality is also reflected in a product being natural
-High self-esteem and individual personality
-Every purchasing trip leads to the acquisition of 8-10 cans
-Life for them is about sharing moments with friends
-A homemade muesli or porridge is the perfect start into a new day - everyday.
-They embrace products allowing them to express their personality. Therefore clothes, food, furniture needs to be all about self-expression and choosing it carefully.

Needs and Motivation

Every person constantly faces a fundamental psychological tension. For brands and products especially 4 main tensions were identified and reflect upon the situation a brand/product puts its consumers. It is relevant that the motivational tension always comes with two needs of a person and these represent the shared emotional leverage between the consumer and the brand/product (Eizaguirre-Dieguez, 2016).

The motivational tension for Zevia as a brand would probably be Recognition and Conviviality. Therefore Zevia leverages the motivational tension of how the brand helps me to put myself forward and feel unique? (=Recognition) and how the brand helps me to be optimistic and open minded towards others? (=Conviviality).

Recognition is best represented by keywords such as creativity, well-being, extravaganza and freshness. Conviviality stands for warmth, friendliness, optimism and spontaneity (Eizaguirre-Diegue, 2016). Zevia’s task is to find a group tangible through homogenous believes and behaviors - all also being subject to this motivational tension on the German market.

Another tool helping to formulate the Marketing Challenge are the three levels of consumer understanding. These consist of the Consumer Insight, the Category Insight and the Relevant Brand Difference. Where all three of them overlap the highest point of emotional leverage, so-called Consumer Point of Inspiration (=CPI) is discovered and represents the best spot for the brand to target its consumer. For Zevia the CPI is very likely to be: To keep me going I rely on bubbles and freshness in my soft drinks that is just perfect for me and will embody me as a person among others who share my aspirations in life.

As Zevia knows its current core consumer in the US very well, it should homogenous the possible growth groups on the German market, define a CPI for each of them and consequently decide which one is most likely to provide the most rapid growth and their values merge with the brand’s (Eizaguirre-Diegue, 2016).

Competitive Advantage

Zevia’s competitive advantage is to be found in (a) no artificial sweeteners, (b) a clean label, (c) non-GMO verified, (d) gluten-free, (e) no caramel color, (f) kosher and (g) vegan products.

For the 12 week period ending on the 20th of April 2014, Zevia’s market share in the naturally sweetened zero calorie CSD was 81%. So Zevia was the first zero calorie soda sweetened with stevia and still remains the leader in natural diet soda. With 15 to Americans familiar flavors, Zevia is on a mission to provide soft drink lovers a smarter soda option containing no sugar and no artificial sweeteners (The Non-gmo project: Zevia, 2016). All 15 flavors of Zevia are certified vegan, kosher and gluten free.” Zevia managed to be on the 14th rang among all Low/Zero Calorie Sodas in the US. It is the only independent brand among the first 20 ones and the only one with positive growth among the first 15 brands.

Price

The price for a 0.355l can of Zevia soft drinks is $5 or €4.5 independent of the taste.

Placement

Zevia particularly focuses on sales in supermarkets, as on average consumers buy 8-10 cans in one shopping trip (Wahba, 2014). Currently Zevia is sold in around 50% of all grocery stores in the US. Since 2015 Zevia can also be bought in conveniences stores, such as holiday station stores in Minnesota and Wisconsin (Littman, 2015). Maintaining its focus on volume purchasing possibilities provided by the supermarkets, Zevia’s sale figures for 2015 were estimated by having sold 100 million beverages (Littman, 2015). Additional to their online business, which will soon start with sales from their websites, consumers asked Zevia for the possibility to access also the single purchase market and offer their product in theatres and gastronomy (Wahba, 2014).

Promotion

As Zevia, in contrast to most carbonated soft drinks, does not have a main target group of the 50+ generation, but rather the so called millennials or generation Y (18 to 34 years), the company mainly focuses on social media for their marketing strategy. After some attempts to use the channels of scrapped billboards, radio and mass media, they excluded these options and focused on online media (including Spotify) to reach their main target audience. One of these strategies was monthly coupons on Facebook (Littman, 2015).

As in May 2016 Zevia runs an active account on Facebook

(https://www.facebook.com/ZEVIA), Twitter (https://twitter.com/Zevia), Pinterest (https://www.pinterest.com/zevia/), YouTube

(https://www.youtube.com/user/Zevia/videos) and Instagram (https://www.instagram.com/zevia/).

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Figure 5: Social Media and Website Layouts of Zevia

Besides these social media platforms Zevia sends out an e-mail newsletter. It is sent out on a monthly basis, always at the beginning of the month.

By 30th of April 2016 since the 6th of January 2016 Zevia sent out three newsletter. The first one, sent in February, read the headline: “Spend a Day with Zevia + 6 pk Giveway!” and displayed people and their favorite traditions of consuming Zevia throughout the day. The second one, sent out in March, included a survey about consumer’s purchase under the headline “Want to be a secret flavor tester?” The newsletter from April displayed an infographic on the topic “Sugar is killing us”.

Generally speaking, Zevia’s advertising focuses much on promotion. Apart from the promotion via newsletter, Zevia holds a price promotion policy in supermarkets and focuses on several online stores on volume purchasing.

On their Instagram Profile, during the months of January, February and March 2016, Zevia regularly run a promotion in which friends or beloved ones could tag each other in comments of the post and would then send free Zevia to the winning participants. This tactic of Zevia seemed to increase the overall amount of comments on their Instagram posts. Their regular posts are aesthetic pictures - often a combination of some accessories, prepared food and fruits with a message. Zevia attempts for interaction by asking its audience to tell them about their favorite Zevia taste, when and where they drink it and in what combination - either with food or alcohol. Additionally Zevia itself provided some inspirational content for foodies.

The content of all social media platforms is aligned to a high extent and consists mostly of the same pictures and messages. Only Facebook is used to share some additional articles or interesting news that is given to Zevia’s followers through a second channel and YouTube provides a highly diverse content. On this platform a little amount of promotional videos by Zevia itself are published, the focus is mainly on videos by private people comparing the tastes of Zevia and other CSD, and news or experts talking about natural sweeteners vs. artificial ones.

The website of Zevia can be described as engaging as well. Besides displaying the products in a nice way and giving them a high amount of attention, it is divided into the following sections: (a) blog including very short posts about apps encouraging to lead a healthy lifestyle, recipes and edible crafts; (b) an extra section on (exotic) recipes with Zevia as an ingredient; (c) a media section providing pictures of all products in various sizes for journalists and (d) they offer to sponsor events and provide people with a sample kid.

The website provides some information on sugar and how to avoid or use it in the right way. The information is provided by registered dietitian and nutrition consultant Michaela Ballmann while assisting them in finding the right way to do so.

[...]

Details

Pages
168
Year
2016
ISBN (eBook)
9783668341241
ISBN (Book)
9783668341258
File size
2 MB
Language
English
Catalog Number
v342094
Grade
9,2
Tags
zevia soft drinks interantional marketing Germany

Author

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Title: The development of an international marketing strategy for ZEVIA on the Soft-Drink market in Germany