International Marketing on Spam
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Introduction Before introducing the product, why is international marketing important? It is important to the growth of global and domestic companies for a reason. Many companies decided to go international because it can increase profit, the company will be able to obtain more unique products for its nation, resources obtain from other nations could lead to technological advances and could get tax benefit if the countries put tax on international trading. (Luke Wilcox, 2013)Introducing the product of SPAM, it is a canned precooked meat product made by the Hormel Foods Corporation, first introduced in 1937. Hormel Foods Corporation is an American food company based in Austin, Minnesota that produces Spam luncheon meat. The company was founded as George A. Hormel & Company in Austin by George A. Hormel in 1891. It changed its name to Hormel Foods in 1993. The labeled ingredients in the classic variety of Spam are chopped pork shoulder meat, with ham meat added, salt, water, modified potato starch as a binder, sugar and sodium nitrite as a preservative. Spams gelatinous glaze, or aspic, forms from the cooling of meat stock. (Wikipedia, 2014)Figure 1.1[pic 1]There are several different flavours of Spam products, including:Spam Classic: Original flavourSpam Hot and Spicy: With Tabasco flavourSpam JalapenoSpam Black PepperSpam Lite: “33% fewer calories, 25% less sodium, and 50% less fat” Made from pork shoulder meat, ham, and mechanically separated chickenSpam Oven Roasted TurkeySpam Hickory Smoke flavourSpam with BaconSpam with CheeseSpam GarlicSpam TeriyakiSpam Tocino (Philippines)SPAM product is not only selling it America but they expand it around the world like Philippines. World War II made a huge impact on the lives of the Filipino people, most specifically on the food. Because the Japanese took over the Philippine islands, the Filipino people were constantly running away from them, which meant they had to leave their crops and animals they couldn’t bring with them behind. Since American soldiers were present basically everywhere around the Philippine islands, their food rations were the only way they could get food to survive. These soldiers would then give their surplus items to the Filipino people. One of the key products that came from these rations was SPAM, which nowadays is considered a main food dish that Filipinos treasure. By the end of the war, SPAM products were adopted into local culture, with Fried SPAM Classic and rice becoming a popular meal. The unique flavor quickly found its way into other Hawaiian cuisine, from SPAM® Fried Wontons to SPAM Musubi , and SPAM® products became a fixture in breakfast, lunch, and dinner. (Makinig, 2009)
Main Section – Marketing EnvironmentIn the marketing environment, there will be a PEST analysis to consider. PEST refers to Political, Environmental, Social and Technological. Figure 1.2[pic 2]Political FactorThis takes into account the level of government intervention in the economy. Political factors are important as businesses need political stability to operate or they will fail to achieve the desired level of profitability. Apart from the stability, the political factors also taken into account include government policies, tax laws, labor regulations and trade policies. (PESTLE ANAYLSIS, 2014)In the political factor, U.S. rules requiring meat and fresh produce to be labelled by national origin are falling short of lawmakers aims, leaving shoppers in the dark about where mixed vegetables, steaks and Spam come from, some lawmakers say.Six years after being adopted by Congress, country-of-origin labelling takes effect today. Concern about unsafe imports from China and Canada helped overcome food industry efforts to delay the measures. They will cost companies $2.5 billion in the first year, with retailers spending more to market beef, pork and lamb, the U.S. Department of Agriculture says. Industry groups say expenses will be even higher.Some lawmakers and consumer advocates say loopholes will let meatpackers blur the distinction between foreign and domestic meat. Mixed vegetables are exempt from the requirements, as are processed foods ranging from roasted peanuts to Spam, the canned luncheon meat made by Hormel Foods Corp. More regulations may be needed, the lawmakers say. (Bloomberg, 2008) Economic FactorThrough this factor, businesses examine the economic issues that are bound to have an impact on the company. This would include factors like inflation, interest rates, economic growth, the unemployment rate and policies, and the business cycle followed in the country. (PESTLE ANAYLSIS, 2014)In the economic factor, according to an Associated Press article, SPAM sales were 10.6% higher in the second quarter of 2008 than the same period in 2007. Its manufacturer, Hormel Food has seen profits increase 14%. One factor contributing to the profit rise is the price of Spam, which has increased 17 cents, or nearly 7 percent, to $2.62 for a 12-ounce can. A rise in the price along with no decrease in demand has a positive impact on profits. Williams did not notice that many fresh meats are still cheaper than Spam, which sells for about 22 cents per ounce. According to the U.S Department of Agriculture, ground beef (15 cents), boneless hams (20 cents), most chicken (10 cents) and whole frozen turkeys (7 cents) retail for less per ounce than Spam. Still, Williams construed it as a sign of hardship of families meeting their need for food. (Jeff Poor, 2008)