Country Market Analysis

MEXICO Lipton Iced Tea

LIPTON ICED TEA IN U.S. Positioning:

Healthy alternative On-the-go refreshment Variety of flavors

sweet, un-sweet, lemon, raspberry, peach, green tea

Target Market: Adults who seek a healthy lifestyle

Distribution: Pepsi-Lipton tea partnership is the leading ready-to-drink

tea producer in U.S. & Canada

TRANSITIONING INTO MEXICO

Issues to Consider: How much will consumers be willing to pay in Mexico? Will the current product line in the U.S work in Mexico? Where do consumers in Mexico purchase iced tea, and

how do we make it available to them? Is the consumer base large enough for Lipton Iced Tea to

enter the Mexican market? How will the population become aware of our product?

AGENDA Price:

Factors that affect price Product:

Cultural differences and how competition influences product decisions

Place: Distribution options and advantages

Promotion: Ways to reach consumers

PRICE

Considerations for a pricing strategy: Disposable Income:

Mexico is a relatively poor country Per capita: $9,000*

*This is about ¼ of the U.S. average 40% live below poverty line

Competitive Pricing: McKormick, Nestea, and domestic brands

Consumers in Mexico are willing to pay a lower price for domestic brands

PRICE

Distribution Costs’ Effects on Pricing: Partnership with Pepsi – reduces distribution and

production costs Economies of scale

Advertising Effects on Pricing: TV and radio are the most effective forms of media,

but are most expensive Increased advertising may fluctuate prices

PRODUCT

Languages and Dialects: 95% of people speak Spanish

Different interpretation for marketing strategies with the different dialects in the Mexican culture

According to Mexican laws, you must translate your marketing literature, product manuals, labels, and warranties into Spanish

High literacy rate of 92% Consumers will be better educated about product Less likely to misinterpret labeling or packaging

PRODUCT

Religion: Catholicism plays a major role in society and

Government Mexicans value the meanings of symbols in a religious

sense Research logos to be used by Lipton for product

PRODUCT

Mexico’s unsafe drinking water Water source? Purified?

Competition – other successful iced tea brands Closely observe their strengths and weaknesses

Flavors Colors Ingredients

Obtain consumer feedback on already established brands of iced tea

PLACE Free market economy, very

similar to U.S. Retail outlets in Mexico for new

age beverages: Standard Grocers - 51.6% (of the

market’s value) Traditional grocers - 32.2% Convenience stores - 5.2% Kiosks - 3.7% Discount grocers - 3.4% Petrol Station stores - .5% Vending - .2%

PLACE Additional Availability:

Movie Theaters Cinemex - Mexico’s largest cinema chain

Pepsi is the supplier of cinemex’s drinks Street Vending

Distribution Options: Unilever Plant

Currently present in Mexico Needs to be adapted to produce tea

Local Mexican Distributor Finding well respected Mexican distributors is difficult

50-50 joint-venture with Pepsico

PLACE

Existing Presence in Mexico: Unilever

Several successful brands and production plants within Mexico

Pepsi The Pepsi Bottling Group Mexico reaches 65% of the Mexican

market place A well established, strong brand in the Mexican market Existing business relationships Strong brand loyalty

PLACE

Pepsi-Lipton International: A 50-50 joint venture between Pepsi and Unilever Uses Pepsico’s extensive bottling and distribution

network Pepsi-Lipton International joint venture has proven to

be extremely successful among other international markets

PLACE Pepsi Bottling Group Mexico

5 different territories 22 production facilities with water

purification 180 distribution centers 5,200 trucks on the road making

deliveries each day 26,000 employees 4 other Pepsi franchise bottlers

serve the remaining regions

PLACE

Surface Transportation Railways: 12,120 miles Highways: Total: 204,800 miles

137,600 miles unpaved

Problems: Getting product to retail outlets Consumers getting to retail outlets and getting product home

PROMOTION

Population - 104,959,594 Growing 3 times as fast as U.S. Ever-expanding group of potential customers

Segmented market due to social classes Mexicans are very status conscious To be considered when positioning product

Television Reaches 19,284,881 of 22,268,916 households in Mexico,

or 84% of households have television

PROMOTION

Channel Technical Penetration (%)

Cost of 30 Second Spot on Network

(in U.S. Dollars)

2 99% $22,314

4 33% $2,168

5 90% $11,232

7 94% $8,272

9 73% $2,886

13 97% $10,013

Commercial Television

Basic channels reach large number of peopleStrong opportunity to market to the massesPeak times are between 7pm-midnight

PROMOTION

TV

Advertiser

TV Expenditure

(in U.S. Dollar)

Televisa $781,000

TV Azteca $285,400

Procter & Gamble $109,012

Bimbo $105,529

Coca~Cola $103,178

Colgate $67,044

Pepsi Cola $56,508

Unilever $54,680

Unilever – 8th highest spending on Mexican TV advertising

Established presence and relationships with advertisers and TV companies

Know how to reach customers

Sensitive and aware of Mexican customs Business and personal

PROMOTION

Other Media Outlets: Radio Newspapers Magazines Cinema Internet

Radio is 2nd strongest, while internet is only able to reach a small fraction of consumers

PROMOTION

Competition “New Age Beverages”

iced teas, sports drinks and bottled waters Iced Tea Products

Particularly are popular in Northern Mexico Consumers are more influenced by consumption trends of the

United States

McKormick – leading brand of iced tea Coca-Cola – Nestea brand of iced tea

PROMOTION

Iced Tea Targets: Towards 25-40 year old age group Those concerned with living a healthy lifestyle

Nestea’s motto: “Cuando te sientes bien, se nota” (one can tell when you’re feeling good)

Other Competition: Gatorade

Dominant force in sports drinks market. Powdered drinks

Low price creates high demand Liquid concentrates

Ease of handling and generally lower prices. Carbonated beverages

PROMOTION

Lipton must decide how to position itself in the existing market Similarities with competition Differences between competition

Coupons, Sales Promotions, Sampling Standard groceries enable us to consider these types

of promotion as an option

KEY CONSIDERATIONS

Pepsi-Lipton Joint Venture Production Distribution

Unilever’s Existing Presence in Mexico Mexico = Free Market Economy High Television Penetration Existing Iced Tea Brands 40% of People Live Below Poverty Line

GRACIAS!

ANY QUESTIONS?