A global marketing report on an international market a case study of lay’s

I, Executive Summary The report presents the global marketing strategies of Lay’s in China and India.. Utilizing the waterfall approach in market expansion and hierarchical modes in oper

A GLOBAL MARKETING REPORT ON AN INTERNATIONAL

MARKET: A CASE STUDY OF LAY’S

Leeturer: Nguyen Thi Thu Thao

Ho Chi Minh City, September 26, 2024

TABLE OF CONTENTS

1 Executive Summary

2 Global Overview of Lay's Potato Chips

3 Overview of China and India

5 Market Expansion Strategies and Market Choice

5.1 Market Expansion Strategies

6.2.1 Sociocultural distance between home country and host country

6.2.2 Country risk/demand uncertainty

6.2.3 Market size and growth

6.2.4 Direct and indirect trade barriers

6.2.5 Intensity of competition

6.2.6 Small number of relevant intermediaries available

6.3 Desired Mode Characteristics

I, Executive Summary

The report presents the global marketing strategies of Lay’s in China and India From

the context analysis of Lay’s and two markets compared to the competitors, and the

application of BERI scoring and the MACS matrix The conclusion indicates that

China's market attractiveness is notably higher, driven by key economic factors and its

large population Lay’s possesses strong competitive advantages in this market,

including a well-established brand, robust marketing capabilities, and advanced

technological resources As a result, China has been selected as the primary market for

strategic focus Utilizing the waterfall approach in market expansion and hierarchical

modes in operations, Lay’s can leverage its established brand equity and point of

difference to develop 4P strategies to catch up with consumer trends and boost market

presence and sales

2, Global Overview of Lay's Potato Chips

Lay's is a global snack brand with a wide-spread presence in over 200 countries,

offering unique flavors tailored to local tastes, like “Magic Masala" in India or

“Wasabi Ginger” in Japan (Lay’s, n.d.) The company stands out from its competitors

by implementing a focused strategy on localization, adapting both products and

marketing campaigns to different culture aspects (The Enterprise World, 2023) This

constitutes the 'elocalization’ approach that is tremendously applied by firms - “the

development and selling of products or services intended for the global market, but

adapted to suit local culture and behavior” (Hollensen, 2013) Embracing the spirit of

"Think globally, act locally’, Lay's aims to implement innovative marketing and create

emotional connections with customers through campaigns that excite consumers, such

as “Do Us a Flavor” and "Smile Deke Dekho" tn India (Lay’s, n.d.) As a PepsiCo’s

subsidiary, Lay’s has the competitive advantage of having a wide-spread distribution

network and substantial marketing resources Lay’s seeks to expand market share,

introduce localized products, and promote sustainability to align with global consumer

expectations in emerging markets like Asia-Pacific and Latin America

3 Overview of China and India

In this report, China and India are chosen as two emerging markets for Lay's

penetration strategy Table 1 shows the overview of these markets based on the PEST

model (Hollensen, 2013) Using the PEST model, the chosen countries are analyzed

following the criteria relating to Political - Environmental - Social - Technological

aspects, which will paint a picture of the potential power of China and India

base

Technological | Adapted promotional approach | Leveraged extensive distribution

utilizing local expertise to resources to penetrate navigate complex logistics

ingredients from Indian farmers

Pricing and] Considered local purchasing Leveraged its vast distribution

Distribution | power and competitor landscape | network, partnering with local

distributors and retailers

Table 1; Overview of China and India

Source: (Mariadoss, n.d, Chapter 6); (The Enterprise World, 2023); (Guillén, 2024);

(Thirdeyeblindproductions, 2024); (Team, 2022)

Overall, it is highlighted in Table | that Lay’s approaches to market entry for each

market may differ significantly because of geographic, economic, cultural, and

technological factors To be specific, India has a growing F&B industry which

benefits from a diverse culinary landscape, leading to increasing demand for

convenient snacks, gaining strong local engagement through ingredients sourcing

from Indian farmers However, its varied infrastructure requires tailored promotion

strategies and rigorous logistics plans to ensure streamline distribution Pricing

strategy also needs to be suitable for local purchasing power considering competition

On the other hand, China benefits from having a large consumer base due to a big

population and a rapidly growing F&B sector, supported by extensive distribution

networks and local partnerships Yet, Lay’s will need to constantly adapt its products

to cater to local tastes in China In summary, though both countries offer tremendous

opportunities, China yields a larger consumer base and well-established infrastructure,

while India requires more locally-driven strategies

4 Market Selection

4.1, Criteria Definition

According to Sakarya et al (2007b), market size, growth rate, fit between customer

preferences and the product and competitive rivalry are the needed criterias for

preliminary screening However, for each product or brand, it is important to identify

suitable criteria for research needs The approach to assessing market entry

possibilities for emerging markets is a combination of traditional and modern methods

of incorporating micro analysis at the industry and customer levels into country level

macro analysis (Sakarya et al., 2007b) For the case of Lay’s, we provide a

comprehensive BER] analysis for the preliminary screening, followed by fine-grained

screening exploring the market's attractiveness and competitive strength in the chosen

markets, being China and India

4.2 Preliminary Screening

Over recent years, there are various indices developed to assess the risk factors in the

evaluation of potential markets In this report, we use the Business Environment Risk

Index (BERI), which assesses countries several times a year on different economic,

political and financial factors on a scale ranging from 0 to 4 (Hollensen, 2013) The

criteria included in the overall BER] index are illustrated below in Figure 1, providing

a macro-oriented screening method

Criteria Weights Multiplied with the score Overall BERI

(rating) on a scale of 0-4* index?

Long-term loans/venture capital

Attitude towards the foreign investor and profits

Communications: phone, fax, internet access

Local management and partner

Professional services and contractors

Total 4 a x 4 (max.) = max 100

Figure 1; Criteria included in the overall BERI index

Source: Hollensen (2013) Based on the BERI tndex put forward by Hollensen (2013), we conducted a desk

research for justification of BERI score in Table 2 and calculated the overall BERI

score of each country in Table 3 shown below

(2020)

Balance of payments - Net errors and omissions (2023) -315.99 -37,925.85

Wage by Country 2024, n.d.); (TRADING ECONOMICS, n.d.); (Enforcing Contracts

- Doing Business - World Bank Group, n.d.); (2024 - GSMA Mobile Connectivity

investor and profits

being unacceptable, 1 meaning poor, 2 showing average conditions; 3 inferring above

average conditions and 4 indicating superior conditions The score is then multiplied

by the weights for each criteria, which yields the total points for each country From

Table 3, China has a total score of 75, meaning that it is not a very favorable market,

but still an advanced economy (Hollensen, 2013) This suggests that China seems to

internationalization strategy As for India, the total score 61.5 indicates that it is an

immature economy but still has potential to invest in (Hollensen, 2013) In the next

section, a fine-grained screening is executed to further assess the potential of China

and India through market attractiveness and competitive strength

4.3 Fine-Grained Screening

4.3.1 Market’s Attractiveness

Because the BERI analysis only provides a macro-oriented screening and focuses

mainly on the political risk of entering new markets, a broader approach assessing the

competences of the firm, including market’s attractiveness and competitive strength is

often needed (Hollensen, 2013) The criteria to analyze market's attractiveness is

illustrated in Figure 2 as follows, but in this report we only chose a few including

economic position, market growth, buying power of customers, market focus as

market access as we believe that they show significant and differential statistics

between China and India

Market/country attractiveness Competitive strength

Market size (total and segments)

Market growth (total and segments)

Buying power of customers

Market seasons and fluctuations

Average industry margin

Competitive conditions (concentration, intensity,

entry barriers, etc.)

Market prohibitive conditions (tariff/non-tariff barriers,

import restrictions, etc.)

Government regulations (price controls, local content,

compensatory exports, etc.)

Infrastructure

Economic and political stability

Psychic distance (from home base to foreign market)

Market share Marketing ability and capacity (country-specific know-how) Product's fit to market demands Price

Contribution margin Image

Technology position Product quality Market support Quality of distributors and service Financial resources, access to distribution channels

Figure 2; Dimensions of market/country attractiveness and competitive strength

Source: (Hollensen, 2013)

Applying the model, the justification and the total market’s attractiveness score of

each market is presented in Table 4 and 5 below

product innovation, brand

perception, consumer

engagement

Focus on a quality-driven market strategy

Scientific Research in Science and Technology IJSRST, 2018); (BT 2024 India

Country Report, n.d.); (The Heritage Foundation, n.d.)

compared to India’s 2.7 In addition, compared to India, China has a stronger

economic condition (GDP per capita) and significantly higher customer purchasing

power, making it a more attractive market Both countries show equal potential for

market growth and strong market focus, though still facing similar challenges in

market access, scoring equally low China's slightly higher BERI index also suggests a

more favorable business risk environment compared to India, which aligns with the

results from the preliminary screening stage

4.3.2 Competitive Strength

Considering competitive strength analysis, we continue to assess the criteria put

internationalization strategy, illustrated by Figure 2 above

Applying this framework, this report will focus on analyzing Lay’s diverse flavor

profile and innovative marketing campaigns, which are the most important factors

making Lay’s stand out from its competitors Thus, we have the justification for Lay’s

competitive strength in China and India demonstrated in Table 6 and 7 as follows

1.Market share Market leader in China with

the highest market share

Significantly smaller market share

Pringles, as part of Kellog’s, made efforts in enhancing its

3 Image

leading snack brand in China, recognized for its extensive range of flavors that cater to

global brand, its recognition in China is not as strong as Lay's

It faces stiff competition from both local brands and other international players, limiting

its visibility

4 Marketing Lay's stands out with its highly Pringles relies more on its

capacity approach and ability to deeply | broad appeal to compete in the

storytelling and regional pride

financial backing and access to

distribution channels, but it operates on a smaller scale compared to Lay’s, limiting its reach

affordable, fun snack that fits into everyday life It has carved out a niche as a

engaging advertising that

with

nuances Campaigns like

"Tedha Hai Par Mera Hai"

As a global brand, Lays

has access to significant financial resources from

PepsiCo This allows Lays

innovation, and expansion

Lays leverages PepsiCo's

network in India, which

formats like supermarkets

However, its reach is more While Kurkue also

benefits from PepsiCo's resources, it has a more

concentrated in urban|stores, and even street

accessibility across the country

PepsiCo's powerful distribution network and technological prowess further solidify Lay's position in both markets, facilitating efficient product delivery and innovative marketing strategies This strategic advantage allows Lay's to maintain a favorable stance against competitors like Pringles, which, despite its unique product design and marketing efforts, struggles to achieve a comparable market presence

In India, Kurkure capitalizes on its unique positioning and local flavor appeal but faces challenges with brand recognition outside its home market and must adapt to evolving consumer preferences Overall, Lay's dominance in both China and India showcases its effective adaptation to local tastes and robust operational capabilities From there, we have the results of the competitive strength of Lay’s as Table 8 below, ranging from | to 5

Figure 4: The MACS matrix Source: (Hollensen, 2013)

5 Market Expansion Strategies and Market Choice

5.1, Market Expansion Strategies

Lay's primarily utilizes the waterfall approach as its market expansion strategy through three aspects

Firstly, Lay's adopts a sequential market entry approach, concentrating on one region

at a time before venturing into others This method enables comprehensive market research and product adaptation tailored to each specific region

Secondly, Lay's implements localized strategies by customizing marketing campaigns

to resonate with the local culture An illustrative example is the "Do Us a Flavor" campaign, which solicits local input for developing new flavors that cater to specific regional preferences

Lastly, Lay’s uses gradual scaling by leveraging insights gleaned from previous market successes to guide subsequent expansions into new markets This iterative process ensures a more informed and strategic approach to growth

Time