Entry market strategy for Brazil and Italy

1. Whole Foods Market
goes global
Entry market strategy for
Brazil & Italy

2. Company overview
AMERICAN ORGANIC FOODS SUPERMARKET CHAIN BASED IN
AUSTIN, TEXAS
• 312 stores spread in the USA (297), Canada (8) and the UK (7)
FOUNDED IN 1980 BY JOHN MACKEY
• Annual revenues in 2011: US$ 10.1 billion
ENTERED THE UNITED KINGDOM IN 2004
• London (2007): first full-size store
• Glasgow (2011): first Scottish store
• Cheltenham (2012): last UK store
PRODUCTS
• Seafood • Grocery • Bakery
• Meat and poultry • Prepared food & catering
• Specialty (beer, wine & cheese) • Coffee and tea • Books
• Nutritional supplements • Vitamins • Body care
• Floral items • Pet products • Household

3. Financial Highlights
CHART 1: CHART 2:
10.1 billion US$ revenues in 2011 8.5% comparable store sales
growth, highest result in 5 years
(WFM Annual Report 2011)

4. Strengths and Weaknesses
Strengths Weaknesses
Strong ethical values High cost in expansion
Community involvement Large perishable inventory
Premium prices &
High inventory costs
Finest quality of goods
Shortage of inventory in certain
Minimal level of expensive advertising
categories
Organic products retail leader in the USA Geographic limitations
Strong WFM-supplier collaboration Low brand awarness outside the USA
Good distribution system
Well trained staff with specialized skills
Value price private-labels

5. Positioning
+
Brand awareness
- +
Ethics
+
Price
- +
Quality

6. Highest
quality
products
Caring for
Food safety
the
concerns
environment
Organic
market leader
Ranked #32 Whole Planet Satisfying
Community “100 Best Foundation &delighting
involved Companies (created customers
to work for” 2005)
Whole Kids 6 EPA* Green
Foundation Power Healthy
Creating (created Awards eating
health 2011) (2004-2010) education
Supporting Organically-
employees grown foods

7. Branding
Advertising
Less money spent
Budget on advertising and ADV Word-of-mouth recommendations
marketing than and testimonials from customers
other supermarkets
Approximately Marketing budgets allocated among
0.4% of total sales national and regional programs &
in fiscal year 2011 individual stores
Engage with customers through
social media websites, e-
newsletters and blog
Over 725,000 fans on Facebook and
over 2 million followers on Twitter

8. Branding Brand identity
High quality
Brand Equity • Lifestyle brand
• Environment
friendly
Feelings Judgment
• Ethical • Value service
•Healthy • Quality
• Active • Community
involved
Users’ profile Performance
• Middle to upper class • High quality provider
• Healthy eating • Supporting
• Families, Partners and employees
Couples • Quality awards Core brand
• Professionals winner values
• Satisfying and delighting customers
• Creative wealth through profits and growth
• Caring about communities and environment
• Creating on-going win-win partnerships with
suppliers

9. Why WFM in Brazil?
• Organic food sales grew by +40% (350 M BRL) in 2010
• 1.8 Billion ha of agricultural land (2nd largest in south
America)
• 332 M ha: soil devoted to organic agriculture and
farming (APEX-Agência Brasileira de Promoção de
Exportações)
• 74.5% of organic products’ consumers believe that
they taste better, are safer in terms of health and
hygiene and look better than conventional products

10. Market analysis
BERI analysis
ATTITUDE
POLITICAL ECONOMIC LABOUR COST/ TOWARDS MONETARY
STABILITY GROWTH PRODUCTIVITY FOREIGN INFLATION
INVESTORS
9 10 8 4 4.5
One of the
High, but in
Same party fastest
2012 High inflation
rules since growing
decreased to Open to rates, +5.4%
2003. Next emerging
153.57 Index foreign inflation in
elections in economies in
Points to investments 2012
2014 the world:
155.35 index
GDP 2476.65
points
billion US$
Evaluation: LOW RISK 64.5

11. Market analysis
Porter’s 5 Forces
Moderate
Potential Entrants
• High barriers to entry
• Importance of branding &
reputation
Moderate • Profitable industry Low
• Open to foreign investment
Suppliers Rivalry Buyers
• Many suppliers • Huge range of organic producers • Low buying power
• Localize market (work with local • Use international/ foreign • Price insensitive
suppliers) identity to increase brand • Like to bargain, will switch if
• Deal with high levels of awareness unhappy with price
Bureaucracy • Growth in organic food market
Substitutes
• Non organic food Moderate
High • Unhealthy food (junk food)
• Price of substitute plays important
role
• Perceived level of product
differentiation

12. Market analysis
Porter’s 5 Forces
Moderate
Potential Entrants
• High barriers to entry
• Importance of branding &
reputation
Moderate • Profitable industry Low
• Open to foreign investment
Suppliers Rivalry Buyers
• Many suppliers • Huge range of organic producers • Low buying power
• Localize market (work with local • Use international/ foreign • Price insensitive
suppliers) identity to increase brand • Like to bargain, will switch if
• Deal with high levels of awareness unhappy with price
Bureaucracy • Growth in organic food market
Substitutes
• Non organic food Moderate
High • Unhealthy food (junk food)
• Price of substitute plays important
role
• Perceived level of product
differentiation

13. PESTLE Analysis
Environmental:
• 1.8 M ha of Technological:
Economic: agricultural land • More than 242 M
• 6th biggest economy • Rich in natural mobile phones (2011)
(World) resources (2nd largest • Broadcast media: more
• High GDP growth rates producer of iron-ore) than 1,000 radio stations
• Biggest economy in • One of the largest and more than 100 TV
South America offshore oil discoveries channels (2007)
• 5.40% unemployment • 75.982 M internet
users (2009)
Legal:
• Corruption
Social: Political:
• Complex tax rules
• Gap between higher • President of Brazil:
and lower class • Slow legal process Dilma Rousseff (since
• Hierarchy of class 2010 up to 2014)
• High consuming culture • Same party rules the
• Family orientated country since 2003
(Source: CIAa)

14. PESTLE Analysis
Environmental:
• 1.8 M ha of Technological:
Economic: agricultural land • More than 242 M
• 6th biggest economy • Rich in natural mobile phones (2011)
(World) resources (2nd largest • Broadcast media: more
• High GDP growth rates producer of iron-ore) than 1,000 radio stations
• Biggest economy in • One of the largest and more than 100 TV
South America offshore oil discoveries channels (2007)
• 5.40% unemployment • 75.982 M internet
users (2009)
Legal:
• Corruption
Social: Political:
• Complex tax rules
• Gap between higher • President of Brazil:
and lower class • Slow legal process Dilma Rousseff (since
• Hierarchy of class 2010 up to 2014)
• High consuming culture • Same party rules the
• Family orientated country since 2003
(Source: CIAa)

15. Hofstede Cultural Analysis
100
Individualism vs. collectivism
90
Collectivist
Power Distance 80
Inequality accepted 70
Uncertainty avoidance
60 Brazil
High Uncertainty- rules and elaborate
legal systems to structure life. Rules and 50
laws important 40 United States
Masculinity vs. femininity
30
Masculine
Short term and long term 20
Long term (accept change as part of life) 10
Official language
0
Brazilian (Portuguese)
PDI IDV MAS UAI LTD

16. Cultural framework
Diffusion Rate
Fast Slow
Context
High Brazil
Low

17. Cultural framework
Social organisation: Values and attitudes:
• Wide gap between rich and poor • Family orientated
• Hierarchy of class • Relaxed and tend to live life in slower pace
• High crime rates • Enjoy socializing
• Fashion conscious
Technology and material culture: Aesthetics to food:
• Huge amount of foreign products • Staple foods to Brazilian diet are root
• High consuming culture vegetables, seafood and meat
• Food tends to be sweet rather than spicy
• The cuisine is welcoming like the people
Diffusion Rate • Health is most important issue in relation
to organic food
Fast Slow
Context
High Brazil
Low

18. Why WFM in Italy?
• Market of organic goods grew by +8.9% in 2011,
whereas goods consumption is decreasing (-4,2% in
2012)
• Demand for healthy food
• €550 M: the turnover for organic products estimated
in 2011
• 1.11 M ha of soil devoted to organic agriculture
• Consumers already aware of the benefits of organic
food

19. Market analysis
BERI analysis
ATTITUDE
POLITICAL ECONOMIC LABOUR COST/ TOWARDS MONETARY
STABILITY GROWTH PRODUCTIVITY FOREIGN INFLATION
INVESTORS
6 5 4 6 3
Political Recession
elections in ongoing. IMF Open to
2013. Labour tax foreign
(April 2012): Inflation in
Temporary and investments
the Italian 2012: +3%
government contributions Good
economy will (Banca
of are 43.4% relation-
shrink by d’Italia)
technocrats (World Bank, ships with
-1.9% in 2012
(PM Mario 2013a) Anglo-Saxon
and by -0.3%
Monti) in 2013 companies
Evaluation: typical industrial economy risk 76

20. Market analysis
Porter’s 5 Forces
Moderate
Potential Entrants
• Purchasing locally produce
goods
• Diversifying stakeholders Moderate to
Moderate • Loyal consumer base high
• Financial investment
Suppliers Rivalry
• NaturaSì (organic supermarket Buyers
• Moderate power • Low buying power
• Need to focus on brand chain)
• Focus on Product, price and • Price insensitive
awareness • Like to bargain, will switch if
• Localize market product differences
• Location unhappy with price
• “What’s new” about WFM
Substitutes
Moderate • COOP (food supermarket chain)
High
• Easily switch to organic range or
non organic
• Price of substitute plays
important role

21. Market analysis
Porter’s 5 Forces
Moderate
Potential Entrants
• Purchasing locally produce
goods
• Diversifying stakeholders Moderate to
Moderate • Loyal consumer base high
• Financial investment
Suppliers Rivalry
• NaturaSì (organic supermarket Buyers
• Moderate power • Low buying power
• Need to focus on brand chain)
• Focus on Product, price and • Price insensitive
awareness • Like to bargain, will switch if
• Localize market product differences
• Location unhappy with price
• “What’s new” about WFM
Substitutes
Moderate • COOP (food supermarket chain)
High
• Easily switch to organic range or
non organic
• Price of substitute plays
important role

22. PESTLE Analysis
Environmental:
• North and South
Technological:
Economic: suitable for cultivation
• 29.235 million (2009)
• 4% GNP from • Cost advantage of
internet users
agriculture having cultivable
environment • 92.3 million (2011)
• 1% economic growth mobile users
since millennium • Organic agriculture
keeps environment •2 media giants: RAI and
• 10.7% unemployment Mediaset
rate until July 2012 (on healthy
recession)
Legal: Political:
Social: • Legal procedures • Current PM Mario
• Rich culinary tradition required Monti nominated after
• Savour typical regional • Time cannot estimated Berlusconi motion of no
cuisines confidence
• Strong food regulations •New PM election by
2013 April
(Source: CIA)

23. PESTLE Analysis
Environmental:
• North and South
Technological:
Economic: suitable for cultivation
• 29.235 million (2009)
• 4% GNP from • Cost advantage of
internet users
agriculture having cultivable
environment • 92.3 million (2011)
• 1% economic growth mobile users
since millennium • Organic agriculture
keeps environment •2 media giants: RAI and
• 10.7% unemployment Mediaset
rate until July 2012 (on healthy
recession)
Legal: Political:
Social: • Legal procedures • Current PM Mario
• Rich culinary tradition required Monti nominated after
• Savour typical regional • Time cannot estimated Berlusconi motion of no
cuisines confidence
• Strong food regulations •New PM election by
2013 April
(Source: CIA)

24. Hofstede Cultural Analysis
100
Individualism vs. collectivism
Individualist (North)
Collectivist (South) 80
Power Distance
Inequality accepted 60
Uncertainty avoidance
High Uncertain- Formality is important, not
Italy
40
comfortable in unknown situation USA
Masculinity vs. femininity 20
Masculine
Short term and long term 0
Short term Oriented, Great respect for history
and culture PDI IDV MAS UAI LTO
Official language
Italian

25. Cultural framework
Diffusion Rate
Fast Slow
Context
High Italy
Low

26. Cultural framework
Social organisation: Values and attitudes:
• Masculine society • Family oriented
• Inequality in standard of living • Religious
between North and South of Italy • More materialist
• Sluggish economy • Interest in money and economy
• Organized crime and corruption
Technology and material culture: Aesthetics to food:
• Interested in new technologies • High food regulation
• High consuming culture • Consume more fruits and
vegetables, milk and dairy product and
Diffusion Rate wine
• Keen about traditional food and cuisine
Fast Slow
Context
High Italy
Low

27. Market trends
& Opportunities
Brazil
Industry market opportunities Key trends & opportunities Consumers:
• Organics Brazil: a program • Obesity on the rise (48.5%) • Enjoy good quality living
supporting and marketing organic (AFP, 2012) • Convenience
producers in Brazil • Open to foreign investment • Price consciousness
• Organic products sales up +40% • Attraction for tourists (grows • Brand loyalty
in 2010 (Organics Brazil, 2011) +7.8% in 2012) • Shopping integrated in the
• Price difference organic Vs. non- • Growing economy (largest in lifestyle of Brazilians
organic products is decreasing south America): +5.5% expected • Spend more than save due to
(30% in 2010, was 70% in 2006) GPD growth in 2013 (Bloomberg, high rising inflation rates
(APEX, 2011) 2012)
• Functional foods market • Boom of middle class (54%)
growing +10% each year biggest official class
• Attracts global companies like
Nestlé, Coca Cola, AIG and etc.

28. Market trends
& Opportunities
Italy
Industry market opportunities Key trends/ opportunities Consumers:
• The market for organic • Enjoy fashion • Old brands respected
food grew from 700 to 800 M • Most organic food producers • Seek approval from family
EUR (+ 14%) in 2010 (Organic in Europe - over 47,000 before making decision
Food Info, 2011) • Tourist attraction - Travel & • Value getting a good deal
• Organic products in the Tourism to GDP in 2011 was • Appreciate high quality
conventional trade also grew
EUR 51.4bn (3.3% of GDP) • Enjoy comfort
from 450 to 500 million EUR
(+11%) (Organic Food Info, 2011)
(WTTC, 2012)
• In 2010, there were 47,663 • Obesity on the rise, growing
farmers, processors and traders +0.5%/year. In 2011, 35% of
• Over 40% people understand overweight. By the age of
benefits of healthy living eight, 36% children will be
obese/overweight (The
Independent, 2011)

29. Market segment
... AND
GEOGRAPHY ITALY DEMOGRAPHY NICHE TOURISTS
Income level:
• Northern and
Central Parts Middle & Surge in
Upper class demand and
• Population 1.3 costumer needs
M (Milan) and
2.7 M (Rome)
Cultured
(ISTAT, 2012)
&
• Growth and
BRAZIL Educated change in
market
• Mid-West and
South-West •Families, • Diversify the
parts Partners and market
couples
• Population (30-50)
2.5M (Rio de
Janeiro) and • Young
11.3 M (Sao Professionals Know the
Paulo) (25-35) costumer
(IBGE, 2010 (a) • Students
and (b)) (18-25)

30. Entry mode strategy
Objectives
Monetary
• < 2 years: 30% organic products market share in São Paulo
and Rio de Janeiro (Brazil) and in Milan and Rome (Italy)
• 2-5 years: 30% organic products market share in Brazil and
Italy
• ≤ 5 years: become market leader of organic products retail
in Brazil and Italy
Brand positioning
• Build and reinforce a strong brand equity for WFM
• Make WFM the top brand for organic products retailing in Brazil and Italy

31. Entry mode strategy
Managing information
Relevant and “usable”
information
Before While
entering the market being in the market
PURPOSE: ISSUES: DATA: PURPOSE: ISSUES:
Know and • Market needs Mostly “control and • Market
understand the • Patterns Quantitative foresee” response
market • correct and
• Threats +
readjust
• Potentials Qualitative
• improve the
offer
Mostly
Qualitative
+
Quantitative

32. Entry mode Strategy
• SEPTEMBER (BRAZIL):
2014 • BRAZIL: NEW STORES 2016
RIO DE JANEIRO, 1 OPENING
FLAGSHIP STORE (FRANCHISING) IN SÃO
• ALLIANCES & • JANUARY (BRAZIL): SÃO PAOLO & RIO DE • BRAZIL: STORES
PARTNERSHIPS PAOLO, 1 FLAGSHIP STORE JANEIRO OPENING IN NEW
(ORGANICS BRAZIL) • BRAZIL: WORLD CUP • JANUARY (ITALY): TOWNS (FRANCHISING)
2014 (SPONSORSHIP) ROME, 1 FLAGSHIP • BRAZIL: OLYMPICS
• JANUARY (ITALY): STORE 2016 (SPONSORSHIP)
MILAN, 1 FLAGSHIP STORE
• ITALY: EXPO MILANO • ITALY: STORES OPENING
• ITALY: ALLIANCES &
PARTNERSHIPS
2015 (SPONSORSHIP) IN NEW TOWNS
(COLDIRETTI) (FRANCHISING)
2013 2015
Budget:
200 million US$ per country

33. Market entry
The 7 ‘P’s Price:
Standardization
Process: Place:
Standardization Standardization
Our karma:
Physical Think
Product:
evidence: global, Act Standardization +
Standardization local customization
+ customization
People: Promotion:
Standardization + Standardization
customization + customization
Approach:
mostly
(Keller, 2008)
Geogentric

34. Market entry Medium-high
prices
The 7 ‘P’s Price:
Standardization
Process: Place:
Standardization Standardization
• Local suppliers • Flagship stores
• Owned stores • Kiosks
Our karma:
Physical Think
Product:
evidence: global, Act Standardization +
Standardization local customization
• Pleasant shops + customization
• In-store • High quality
experience (Italy) • Wide offer
People: Promotion:
Standardization + Standardization
customization + customization
The • Integrated
“right staff” • Customized
(Keller, 2008)

35. Entry Mode Strategy
Marketing Mix
The ‘P’ Brazil Italy Approach
• Category: medium-high • Category: medium-high
Standardization
Price • Same as in the USA converted into BRL • Same as in the USA converted into EURO
(slightly lower than in UK)
• High quality standards • High quality standards
• Wide range of products and labels: • Wide range of products and labels:
“generalist”, 365 Everyday Value®, “generalist”, 365 Everyday Value®,
Standardization
Product Exclusive, Whole Trade® Guarantee, Exclusive, Whole Trade® Guarantee,
+ customization
Premium Body Care, own brand Premium Body Care, own brand
• “Top in store”: greengrocery, • “Top in store”: greengrocery, milk and
butchery, fresh fish dept. diaries dept.

36. Entry Mode Strategy
Marketing Mix
The ‘P’ Brazil Italy Approach
• 1 Flagship store in each town (São • 1 Flagship store in each town (Milan,
Paolo, Rio de Janeiro) Rome)
• central and touristic areas • central and touristic areas
Place Standardization
• Kiosks and “Pop-up stores”: venues of • Kiosks and “Pop-up stores”: venues of
main events (Fifa World Cup and main events (Expo 2015 Milan)
Olympics)
• Suppliers: mostly local (partners) • Suppliers: mostly local (partners)
• Long-term contracts • Long-term contracts
Process • Distribution: direct-control (owned • Distribution: direct-control (owned Standardization
stores) + franchising (after 3 years) stores) + franchising (after 2 years)

37. Entry Mode Strategy
Marketing Mix
The ‘P’ Brazil Italy Approach
• The “right staff”: keen about organic • The “right staff”: keen about organic
products, trained products, trained
• Customer oriented • Customer oriented - focus on products Standardization
People
• Brazilian (mother tongue) + English information + customization
(proficiency) • Italian (mother tongue) + English
(proficiency)
• Pleasant shop environment • Pleasant shop environment
• Shopping + dining (restaurant) • Shopping + dining (restaurant)
Physical Standardization
• In-store activities and events • In-store activities and events (didactical
experience + customization
(didactical activities, food tastings, free activities, food tastings, free samples)
samples) • In-store “consumer corner” (info)

38. Entry Mode Strategy
The 7th ‘P’: Promotion – Key Factors
The public’s right
Strong
type of
emotional bonds Costumers’ Key factors:
experience
with customers experience is the Emotional
(thoughts,
are a crucial in pilaster of the
the general brand equity
feelings, involvement
perceptions, & customers’
process of building process
opinions) is experience
branding (Keller, 2008)
essential
(Hollis, 2008)
(Keller, 2008)

39. Entry Mode Strategy
The 7th ‘P’: Promotion
Target Budget
• Age: 20-55 • (year 1): 20% of total lunch budget
• Gender: mostly women • (year 1-5): 5% of annual profits in each
country
• Job: (young) professionals, committed
students
• Social class and education: middle to
high income| Middle to high education Key messages:
• Interests #1: • “Whole foods, Whole people, Whole planet”
health, environment, quality food and • Healthy lifestyle
lifestyle • Respect the environment
• Interests #2: • Sustainability
fashion, sport, wellness, beauty, culture,
art • Costumer education
• Spread happiness
(De Olivera Lima-Fihlo, 2012; Pellegrini, 2009)

40. Entry Mode Strategy
The 7th ‘P’: Promotion – Activities
EMOTIONAL
INVOLVEMENT &
CUSTOMERS’
EXPERIENCE
APPROACH:
MAINLY
STANDARDIZED
CONVENTIONAL
SPONSORSHIPS,
ADV: UNCONVENTIONAL
ATL+BTL ACTIVITIES: EVENTS, TESTIMONIALS
AMBIENT EDUCATIONAL
MARKETING, PROJECTS
SOCIAL MEDIA
FLASHMOBS
(Burcher, 2012)

41. Entry Mode Strategy
The 7th ‘P’ – Customization
Brazil
Italy
Experts opinions/suggestions
• Focus on in-store activities
• Didactive and informational
events • TV/Radio/Newspapers
• Specialized daily programmes
and editorials
“Try our whole world”:
Sampling and free tasting Famous/relevant testimonials:
• professional sportspeople
• experts
• WoM
• Buzz
Healthy lifestyle

42. Conclusions
Whole Foods Market can successfully enter and survive
both Brazilian and Italian markets
Markets Core ethical Past experience
opportunities values

43. Thank you

44. Note
This presentation was designed to present a group project developed in October 2012 by Sara
Belardi, Anthony Majekodunmi, Anca Marinescu and Kabita Sunuwar.
The project was developed for the “Global Marketing” module taught by Cheryl Johashen at the University
of West London (MSC Corporate Communication – Academic year 2012/2013).
Clearly the developed market entry strategy merely represents a trial and a "scholastic" exercise.
The parts of the project and the group members’ roles have been organized as follows:
CONTENTS
• Sara Belardi: BERI Analysis for Italy; Information management system; Market Entry Strategy
(objectives, timeframe, “the 7 ‘P’s”, Marketing mix, Promotion)
• Anthony Majekodunmi: market analysis for Brazil (BERI analysis, PESTLE analysis, Porter’s 5 Forces
analysis); cultural analysis for Brazil; market trends and opportunities for Brazil and Italy
• Anca Marinescu: Company overview (market positioning, values, brand analysis); Market Entry Strategy
(objectives and timeframe)
• Kabita Sunuwar: market analysis for Italy (PESTLE analysis, Porter’s 5 Forces analysis); cultural analysis
for Italy; market segment (Brazil and Italy)
EDITING and DESIGN
• Sara Belardi and Anca Marinescu
GROUP COORDINATION
• Sara Belardi