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Letter of Transmittal

24th September, 2013

Mansura Akter

Lecturer

Department of International business

University of Dhaka.

Subject: Submission of report

Dear Madam,

With due respect, we are submitting here our report on “Foreign Market Analysis”. It is

a requirement of BBA program from department of International business, University of

Dhaka. In spite of a number of limitations we have exerted our best effort to prepare this

report and to make it a vivid and comprehensive one for accomplishing our academic

requirement.

we are very thankful to you for giving us such an effective topic to prepare our report and

we are waiting eagerly for any kind of information about our report concern.

Sincerely yours,

Group name: Troopers

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Declaration

In preparing the report we use data from different type of journal and writings and

website . We can say there is no fake data. All of the data is collect in fair way and all of

the data is true as of 24-09-2013. So we can say there is no problem in using data for

further information and research.

Acknowledgement

Our Report is about Foreign Market Analysis. For the completion of the Report we are

much grateful to our course teacher Mansura Akhter, Lecturer, Department of

International Business, University of Dhaka. We also give our utmost respect to our

honorable instructor for giving us her valuable time behind teaching us every step for

evaluating this Report.

We would also like to thank all the team members who worked so hard in order to make a

successful report with such devotion, target, energy and their self participation. However,

this Report was a combined effort. Therefore, all the credit of our accomplishment

spreads to all the helping hands.

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Table of contents

SL.no Context Page no

01. Letter of Transmittal 01

02. Declaration 02

03. Acknowledgement 02

04. Executive summary 05

05. Background of the study 06

06. Origin of the report 06

07. Objective of the report 07

08. Methodology 07

09. Scope of the report 08

10. Limitation of the report 08

11. Introduction 09

12. Product description 09-10

13. Geographic description of market 11-14

14. Competition 15-16

15. Legal environment 16-18

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16. Monetary environment & Financial

considerations

19-24

17. Cultural environment 25-31

18. Political risks 32-33

19. Economic risks 33-34

20. Transportation 36-43

21. Channels of distribution 44

22. Promotion 15-49

23. Conclusion 50

24. Recommendation 51

25. Bibliography 52

26. References 52

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Executive Summary Our topic of the report is Foreign Market Analysis. Our targeted market is Mexico and

our product is Pickle.

At first, we included the general nature of our product, Pickle. We included its

description, uses, benefits, cost, consumers & other characteristics.

Then we described the geographic position of Mexico including maps.

We estimated the demand of pickle in Mexico based on consumption and use of data for

Pickle.

Our main competitor is La Costena brand. We also described the core factors to

determine the level of competition such as: Taste, price, variety, quality.

We also described the legal & monetary environment of our product. Including payment

system, balance of trade, currency, foreign exchange rate etc.

We included the cultural environment of Mexico and how we can promote our product on

the basis of their culture.

We evaluated the political and economic risks of Mexico including the specific resources

of risk involved.

At last we described the transportation and channels of distribution model within Mexico.

We also described the promotional strategies for our product.

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Background of study

We are studying a course of International Marketing in BBA program. As a student of

Business we should know about Various type of business. Also we are the student of

international business we should know how to analyze a foreign market. As a country

cannot fulfill its need by herself so it needs others help. For that reason we export and

import products. And we should know about that. For this purpose in this report we

analyze a foreign market and how we can export our product into that market.

Origin of the report

As a student of International Business school we are now studying a course of

International Marketing. Here we are in attempt to know about the basics of International

Marketing. For that purpose at first we should know how to analyze a foreign market. For

that reason now we are trying to extract knowledge about foreign market analysis..

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Objectives of the report

1. To learn about how to analyze a foreign market.

2. To learn how to minimize the cost and maximize the profit in a foreign market.

3. To gain knowledge about the legal, monetary and cultural environment,

transportation system, political/economic risks of a market.

4. To understand the basic steps of International marketing.

5. To apply the basic steps of Marketing in the foreign market.

Methodology of report

In preparing the report we collect information from the website of Mexico. And different

kind of journals and articles written by renown writers.

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Scope of the report

In preparing this report we try to cover these topics:

1. A brief description of our product, Pickle.

2. Geographic description of Mexico

3. Competition we might face in Mexico.

4. Legal and monetary environment of Mexico.

5. Cultural environment

6. Political and economic risks

7. Transportation and channel of distribution system of Mexico.

8. Promotional strategy.

Limitations of the study

We face some specific problem while preparing this report. These problems created

some barriers to go ahead. These specific problems are –

We didn’t get enough time to prepare this report, that’s why we prepared the

report in a hurry.

We also had to face some problem in collecting information to prepare the report.

We didn’t get all the required materials for enhancing the report.

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Introduction

Pickle is an old ancestry in Bangladeshi food culture. It is very much loved by the

Bangladeshi people and we are choosing pickles as our exporting product. We want to

sell different categories of pickles to Mexico. Our aim is to create a new market for our

country and spread the taste of Bangladeshi food.

Product’s Name and Description

Description: ‘sweet n sour’ ‘hot n spicy’... we want to market every flavors of pickles. In

Bangladesh we usually make pickles by using seasonal fruits like mango, tamarind, plum,

olive etc. So, we want use such types of fruits for our product. We will also use herbs

such as pepper, salt, mixed spices and common supplements like oil, sugar, vinegar etc.

And we want to name our product “Pencante” which is Spanish for spicy.

Market: Our selected market to launch Pencante is Mexico. We all know that Mexicans

are spice lovers and that’s why we think spicy pickles will be able to capture the attention

of Mexican food lovers. Of course Mexico has its own pickle brands but our pickles will

taste different from theirs and we are certain that they will love our “Traditional

Bangladeshi Pickles”

Use: These pickles can be used as a spicy side dish. Pickles can be taken with chips,

sandwich, rice, curry and many other foods to enhance food taste.

Benefits: Pickles are a supplementary food. So it’s only benefit is, it makes food taste

better. Food lovers love pickles because it enhances the food taste and makes a regular

food taste completely different in good way.

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Cost: A jar of Pencante pickles will cost $2.50- $4.50 depending on the fruits type. For

instance,

Mango pickles $3.50

Olive pickles $2.50

Plum pickles $3.00

Tamarind pickles $3.00

Garlic pickles $4.50

Manufacturers in Bangladesh: pioneering pickles manufacturers in Bangladesh are:

Pran, Ruchi, BD Foods, Ahmed.

Product Adaptation: Pencante pickles must go through a few modifications to make it

more successful and attractive in the Mexican market. We will use our traditional

ingredients to make the pickles but we will also make some changes in accordance with

the Mexican culture.

For example, Mexicans like jalapenos, bell pepper instead of green chili. So, we will use

jalapenos or bell pepper instead of green chili or chili powder. We will also use vegetable

oil or olive oil in our pickles recipe to make it desirable to Mexicans.

Geographic Description of Market

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Our selected country to market Pencante Pickles is Mexico. We’ve selected Mexico

because pickles are a popular food item in Mexico. Also Mexicans like spicy dishes. Our

pickles will offer them a new taste and introduce them with some new spices.

Fig. Map of Mexico

Another reason for choosing Mexico is that other Bangladeshi Pickle companies are not

exporting in Mexico. Furthermore, trade relation between Bangladesh and Mexico is an

untapped area. And recently both the countries agreed to create and improve new trade

relation among them. So, Pencante will create a new trade alliance between Bangladesh

and Mexico.

Demand Estimation through Mexican demographics :

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According to the CIA World Factbook (2011), Mexico’s population is young, with adults

aged 15-64 years comprising 65.2% of the total population, and residents aged 14 years

or younger representing 28.2%. Only 6.6% of the population is 65 years and older.As the

larger percentage of population is young and adults it can be easily assumed that pickle

business would be popular in this group.

Young with adults (15-64) 65.2 %

14 or younger 28.2%

65 and older 6.6 %

Diagram :

Source : According to CIA world factbook-2011

Top Packaged Food Category Sales in Mexico in US$ Millions

Fixed 2010 Exchange Rates :

TOP PACKAGED FOOD CATEGORIES

Categories 2011Baby Food 1,075.5

Bakery 29,683.5

Baked Goods 24,910.3

Biscuits 2,691.7

Breakfast Cereals 2,081.4

Canned/Preserved Food 1,621.0

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Canned/Preserved Fish/Seafood 840.5

Chilled Processed Food 1,029.2

Chilled Processed Meat 777.2

Confectionery 4,651.7

Sugar Confectionery 1,994.5

Gum 1,553.1

Chocolate Confectionery 1,104.0

Dairy 11,100.6

Drinking Milk Products 4,606.9

Cheese 3,943.6

Yogurt and Sour Milk Drinks 1,713.2

Other Dairy 836.9

Dried Processed Food 2,810.1

Dessert Mixes 447.6

Dried Pasta 633.9

Instant Noodles 800.6

Rice 768.7

Frozen Processed Food 698.0

Ice Cream 539.1

Noodles 800.6

Instant Noodles 800.6

Oils and Fats 1,726.0

Vegetable and Seed Oil 1,244.8

Sauces, Dressings and Condiments 3,511.4

Cooking Sauces 546.1

Table Sauces 1,628.1

Mayonnaise 727.8

Spicy Chili/Pepper Sauces 396.9

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Pickled Products 1,100.3

Pasta 638.3

Spreads 717.4

Jams and Preserves 592.5

Sweet and Savoury Snacks 3,373.4

Tortilla/Corn Chips 880.1

Chips/Crisps 798.1

Extruded Snacks 743.4

Nuts 391.4

Total Packaged Food 63,222.0

Diagram : Top Packaged Food Category Sales in Mexico in US$

Source : Euromonitor

Competition :

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La Costeña : Conservas La Costeña, usually called La Costeña, is

a Mexican brand dedicated to the canned products market. It was founded in 1923

by Vicente López Recines. The company has become an important brand inside

and outside Mexico. Nowadays, La Costeña sells its products in almost all the

Mexican territory and in 40 countries around the world. In spite of the fact that its

products in the beginning were chilies, the company began producing new

products such as beans, ketchup, vegetables and others. The production plants

have been modified also, in addition there is the fact that the factories have won

some recognitions for the changes in technology and process

La Costena products :

Core factors to determine the level of competition :

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Taste : As most of the Mexican foods are not so spicy they will get

a different taste from our pickle products .

Price : We will try to serve our customers by giving a quality

product at reasonable price with a reasonable profit .

Variety : A wide range of product variations will help the customers

to introduce themselves with more different tastes.

Quality : Although price is a sensitive issue but we are not going to

compromise our product quality by lowering our product price . Its the

quality that will differentiate our pickles from theirs .

Legal Environment:

A nation's economy can be highly volatile and is often a function of a variety of factors.

Mexico

Supply and Demand

The nominal per capita GPD is more useful for determining local consumers’ ability to

buy imported goods. Despite economic challenges, Mexico has established itself as a

major player in global trade, and trade diversification is certainly a goal for the Mexican

economy. The higher the demand for goods and services, the greater the need for workers

to produce them, leading to economic growth. Mexico currently has the twelfth highest

GDP in the world and second highest in Latin America following Brazil. In Mexico there

is a demand for pickle. They have their own brand and competitors who are competing

with one another but Mexico is highly dependent on exporting.

Inflation

When inflation rises, the value of the dollar decreases, so consumer buying power drops

accordingly. It has been said that economy is volatile and Mexico is not Exceptional.

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Higher inflation is typically accompanied by higher prices, so consumers may be less

willing to buy non-essential or luxury items .Though sometimes there is inflation in

Mexico, it does not affect a lot in purchasing a jar of pickle as it is not so much

expensive. But the negative thing can also happen that people are avoiding it as it is not

there fundamental need to eat.

Foreign Exchange Rate

In Mexico, when the value of the dollar is high in relation to other countries' currencies,

the more goods and services we are able to import. In contrast, a higher value of the

dollar means that other nations may be less inclined to import products from Mexico. We

have noticed it before that Mexico import pickle rather than to produce it in their country.

So while importing pickles from other country Mexico have to conscious about the

foreign exchange rate. We should also consider the exchange rate weather it is in our

favor or not.

Unemployment Problem

Mexico is a country of opportunities where half the population enjoys a regular income

and affluent lifestyle. But Mexico was adversely affected by the global economic

downturn and few countries witnessed a drop in GDP as severe. Continuing weaknesses

in Mexico's economy were revealed, regarding wages, underemployment, income

distribution and poverty. Despite this, the government was proactive in dealing with the

impact of a global recession, and a government subsidy was implemented to lessen the

impact of the recession on daily life. However, an estimated 800,000 people lost their

jobs during 2009.While human resource are the fuel of any industry this unemployment

problem can be an opportunity for us if we want to do business there.

Trade Restrictions:

Mexico has a unique setup that they have created for themselves when it comes to trading and trade barriers. A list of some trade barriers Mexico faces are as follows:

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Tariff

In Mexico, some tariff rates of imported goods go beyond 35.0 percent. Mexico levies

much higher average tariff on processed products than on raw materials. In 2005, the

tariff rates of some imported food items were reduced by 10 percent, which further

widened the gap between the tariff rate of the processed foods including pickle and that

of the raw materials. Although the average tariff rate of the semi-processed products is a

litter lower than that of the raw materials, the average tariff rate of the processed products

is still much higher than that of the raw materials.

Quota

5.2 percent of the agricultural products were affected by tariff quota, including poultry,

animal fat, milk, cheese, beans, tomato, coffee, wheat, barley, corn and products rich in

sugar. In addition, Mexico applies different kinds of tariff quotas schemes to the trading

partners with whom Mexico has signed some preferential agreements. The numerous

different tariff quotas schemes contribute to the complexity of Mexico's import regime.

License restrictions

At present, Mexico conducts import licensing administration for certain imported goods.

The written application for import license must be accompanied by the quoted invoice

issued by the foreign exporter, and the validity of the import license is 9 months and can

be extended to another 3 months if necessary. The Ministry of Economy issues import

licenses only when the foreign product has no domestically produced substitute. The

tariff items of the products which are subject to import licensing are to be published in

the Official Journal, but the introduction of frequent changes to the tariff items and the

vagueness of the conditionality of import licensing undermine the predictability of access

to the Mexican market for the products affected.

Custom Restrictions

The Mexican government sets reference prices or officially established evaluation prices

for some 200 goods. The Mexican government has the right, within six months, to decide

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whether to start a formal investigation or to release the guarantee. In 2005, The Mexican

Customs Ministry announced modifications to the designated ports of entry for certain

food products such as apples, beans, corn, fish, fat, sugar, Pickles, meat, animal skins,

and alcoholic beverages

Monetary Environment and Financial Considerations:

Current Economic condition in Mexico:

Mexico is the second largest economy in Latin America and 13th largest in the whole

world. It has remained resilient to the U.S. slowdown and the financial turmoil from

Europe. Although the country is closely integrated with the U.S. industrial production

sector and international capital markets; its strong fundamentals, sound policy

frameworks and management have resulted in favorable financial conditions that have

supported national economic activity.

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In spite of its unprecedented macroeconomic stability, which has reduced inflation

and interest rates to record lows and has increased per capita income, enormous gaps

remain between the urban and the rural population, the northern and southern states, and

the rich and the poor.

According to the” National council on Evaluation Social Development Policy “, 52

million people were living under the poverty line in 2010. It means 46.2% of Mexico’s

total population lives in poverty.

(Ref: http://www.worldbank.org/en/country/mexico/overview)

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President Enrique Peña Nieto took office on December 1st, 2012. The new federal

administration is focusing its efforts and programs along 5 working lines included in

National Development Plan:

“Mexico in Peace

“Inclusive Mexico

“Mexico with Educational Quality for all

“Prosperous Mexico, and

“Mexico an actor with global responsibility

The federal government is currently working in achieving two major and long-

standing constitutional reforms on energy and telecommunications, which intend to boost

competitiveness and growth of these two key economic sectors in Mexico.

Mexico has a huge potential for accelerating economic growth. The country has

maintained a strong growth of 3.9% during 2012. This has been supported by both

external and internal demand, with a firmer expansion in services. Gross Domestic

Product (GDP) is expected to grow 3.5% during 2013 with a recovery in 2014.

(Ref: : http://www.worldbank.org/en/country/mexico/overview)

 As an export oriented economy, more than 90% of Mexican trade is under free trade

agreements (FTAs) with more than 40 countries, including the European Union, Japan,

Israel, and much of Central and South America. In 2006, trade with Mexico's two northern

partners accounted for almost 90% of its exports and 55% of its imports. Recently, the

Congress of the Union approved important tax, pension and judicial reforms, and reform to

the oil industry is currently being debated. According to the Forbes Global 2000 list of the

world's largest companies in 2008, Mexico had 16 companies in the list.[

Balance of Trade:

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Mexico recorded a trade deficit of 1436.74 USD Million in July of 2013. It means that

import is greater than export. . Balance of Trade in Mexico is reported by the Instituto

Nacional de Estadística y Geografía. Mexico Balance of Trade averaged -242.07 USD

Million from 1980 until 2013, reaching an all time high of 1752.97 USD Million in

March of 2013 and a record low of -3292.31 USD Million in October of 2008. Mexico’s

main exports are automobiles and related products (24 percent of total exports), oil and

oil products (14 percent) and agricultural products (3 percent). Main imports are: metallic

products, machinery and equipment (50 percent of total imports), mining products (13

percent), chemical products (6.3 percent). Mexico´s main trading partner is the United

States (78 percent of total exports and 51 percent of imports). Others include: Canada,

China and Japan.

As Mexico is importing products more than it exporting products , we have a great

opportunity for exporting there. It will be profitable for us.

Credit worthiness:

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Credit worthiness means an assessment of the likelihood that a borrower will

default on their debt obligations. It is based upon factors, such as their history of

repayment and their credit score. Lending institutions also consider the availability of

assets and extent of liabilities to determine the probability of default.

Standard & Poor, one of the major credit rating companies, rated Mexico’s credit

worthiness. It rated Mexico as BBB and their outlook was positive. So Mexico’s credit

worthiness is positive.

Currency:

The peso (sign: $; code: MXN) is the currency of Mexico. Modern peso and dollar

currencies have a common origin in the 15th-19th century Spanish dollar. The Mexican

peso is the 13th most traded currency in the world, the third most traded in the Americas,

and the most traded currency in Latin America.[] The current ISO 4217code for the peso

is MXN. The peso is subdivided into 100 centavos, represented by "¢". The name was

originally used in reference to pesos oro(gold weights) or pesos plata (silver weights).

The literal English translation of the Spanish word peso is weight. As of January 4, 2013,

the peso's exchange rate was $16.5914 per euro and $12.7597 per U.S. dollar.

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Foreign exchange rate:

Exchange rates influence many aspects of the firm's activities. For one thing, they

affect demand for a company's products in the global marketplace. When the country's

currency is weak (valued low relative to other currencies), the price of its exports on

world markets declines and the price of imports increases. Lower prices make the

country's exports more peeling on world markets. Furthermore, a company that sells in a

country with a strong currency (one that is valued high relative to other currencies), while

paying workers at home at its own weak currency improves its profits

$ 1.00 Mexican peso=6.00 tk

It means Mexico can import more products with $1.00 MXN. So we can sell more

products and it will improve our profit.

Methods of Financing and Collection:

Exchange controls: There are no exchange controls in Mexico. Foreign currency

can be bought or sold freely. Also there are no restrictions on the maintenance of foreign

currency bank account.

Sources of Finance:

Banking: Mexican banks offer short, medium and long term loan. Repayments

are negotiable. Interest rates can be fixed or variable.

To obtain finance from bank business has to provide adequate securities

such as mortgage over the assets or personal guarantee from owners.

Stock exchange and trading facilities: Mexican Stock Exchange provides a

market for share and securities issued by public companies. To become and remain listed

a company must satisfy and abide by the rules of Stock Exchange.

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Venture Capital Companies: Companies which are not big enough to entry in

the stock market but require finance, they can get help from venture companies. These

companies can provide equity for startup, development and management buy-outs

Payment System:

Mexican are most comfortable in cash payment system. So we will use cash on

delivery system.

Cultural environment analysislanguage

Mexico is the most populous Spanish-speaking country in the world. English is also

widely spoken in Mexico . The overwhelming majority of Mexicans today speak Spanish.

So It goes without saying that one will be at a great advantage if one speaks good

Spanish.

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We can promote our product by giving a good name to it which is related to the Mexican

language and bears a meaning in their country.

Escabeche is Spanish for pickle. In the south and center of Mexico it is pepinillo.

For further analysis we can observe from this chart to what extent the language differ in

Mexico. According to this statistical analysis 92.70% population of Mexico speak

Spanish while the rest speak somewhere in between other indigenous languages and

Spanish.

Figure: Distribution of language in Mexico (2005)

Source: Central Intelligence Agency (CIA)

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Promoting the Product using Mexico’s Cultural Aspects-

We can promote Bangladeshi made Pickle in Mexico by identifying a couple of cultural

aspects and targeting those aspects to trigger our market demand.

 

Mexico’s festival

Mexicans celebrate their independence from Spain on September 16, and other holidays

with festivals known as "Fiestas". We can target these various colorful holidays to

promote our Bangladeshi made pickles during those fiestas as a delicacy item for people

to enjoy. Some of the popular festivals in Mexico are Las Posadas ("The Shelters",

celebrated on December 16 to December 24), Noche Buena ("Holy Night", celebrated on

December 24), Navidad ("Christmas", celebrated on December 25) and Año Nuevo

("New Years Day", celebrated on December 31 to January 1).  We can make use of these

festivals and make advertisement efforts to enlist our Bangladeshi pickles in the food

item list.  One of Mexico’s most important holidays,

El Día de los Muertos” (Day of the Dead), places a huge emphasis on food. Families bake

or buy special sweet bread known as “pan de muertos,” or bread of the dead.

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DAY OF THE DEAD :Nov. 1-3; involves night long vigil with offerings at the graves of

loved ones. Also knows as All Souls Day

we can use different themes on different holidays to make it more significant in the eyes

of the consumer.

 For example during Navidad which is Spanish for Christmas, we can use promotional

slogans such as “share the joy of Christmas by sharing a bite of our delicious mango bar

with your loved ones”

we can choose each theme based upon the festival for which it is being advertised for.

That way we can easily influence and attract people to try our product.

 Piñata

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Some festivals features a piñata for the kids to enjoy. A piñata is made from papier-

mache. It is created to look like popular people, animals, or fictional characters. Once

made it is painted with bright colors and filled with candy or small toys. It is then hung

from the ceiling. The children are blind folded and take turns hitting the piñata until it

breaks open and the candy and small toys fall out. The children then gather the candy and

small toys. We can fill a piñata with small packaged pickles of different flavors and

colors. we can also provide fully prepared piñata with pickles already filled in it. This

ritual is common not only in Mexico but also in some other western cultured countries.

 Pickles in Mexican Cuisine & Foods-

Mexican cuisine is known for its blending of Indigenous and European cultures. Popular

dishes include tacos, enchiladas, mole sauce, atole, tamales, andpozole.

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As the people of Mexico are used to eating spicy foods we can advertise and manufacture

special kinds of pickles for Mexican cuisine

We can promote these products by advertising how it will increase the flavor and how it

will bring a unique taste and sweetness to the food and different cuisine.  We can also

promote our product by telling how these pickles can be used  with the different spices.

Another effective marketing strategy would be to provide  delicious recipes to the

consumers. The creation of new recipes will work as an incentive for the consumer to buy

more of our pickles and make various use of it. 

we can also arrange cooking contests where people who make the best use of our pickles

in food can be rewarded.

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Common food eating customs between us and Mexico

Like us Mexican people like spicy foods and they also eat seafood, meat or poultry  rice

and/ or beans so we can use it to our advantage in promotional marketing program of

promoting our Bangladeshi pickles in Mexico. They consume rice and corn as do we. We

can make special kinds of dips made of pickles which the Mexicans can eat along with

the main course. They also consume bread and beans. Which can also be used to our

advantage.  We can also advertise that our pickles can be used as a special sort of spice

while cooking meat which will add a new dimension to the taste of meat.

 

Food style in different regions of Mexico

Southeastern Mexico is known for their spicy vegetable and meat dishes. The cuisine of

Southeastern Mexico has quite a bit of Caribbean influence, given its geographical

location. So we can produce different types of pickles related to their respective regional

eating habits and style. 

Mexican cuisine is known for its blending of Indigenous and European cultures. Popular

dishes include tacos, enchiladas, mole sauce, atole, tamales, andpozole. We can try to add

our Bangladeshi made pickles to those blends.

 Seafood is commonly prepared in the states that border the Pacific Ocean or the Gulf of

Mexico, we can also encourage the Mexicans to increase their intake of sea foods with

spicy pickles.

 

Adjusting  the strategy of Marketing for our product

We need implement our strategy based on the findings of our cultural food festival

analysis of Mexico. Many would like to learn to cook Mexican food, and find themselves

better equipped once they understand some basic Mexican cooking facts. We can

implement the adjustments to our strategy based on the findings of our cultural food

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festival analysis of Mexico. We will adjust our marketing strategy based on

the characteristics of cooking of the Mexican people and their  local responsiveness

to different factors and items. Before adjusting the marketing strategy to fit

the Mexican market we have to identify different catalyst and motivational factors that

will ensure of the products success. Motivational tools  can be used to influence the

people to buy our products.

 

Strategic control of our marketing campaign involves looking at whether or not our basic

objectives are meeting with the possible opportunities of the Mexican market and our

ability to capitalize on those opportunities. Another step towards effective adjustment to

marketing strategy is the abolition of  outdated marketing strategies . we need to do that

because the marketplace changes frequently. We can regularly reassess and marketing

programs with the changing surrounding of the factors that might affect our pickle

business.

 

We have to consider our costs and difficulties that is associated with market changes.

There are different degree of risk that an exporter to Maxico would be exposed they can

be divided in three section . They briefly present below:

Political Risk:

There are several types of political risks are happens. They are giver below:

1.Confiscation

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2.Expropriation

3.Domestication

4.Political and social activities

5.Non governmental organizations

6.Violence and terrorism

7.Cyberterrorism and cybercrime

Some important about MAXICO political risks are given below:

• Mexico’s ties with large, developed countries are very strong. Most notably, in addition

to NAFTA, Mexico is a member of the Organization for Economic Cooperation and

Development (OECD).

• Social instabilities in the southern states, as well as violence related to the narcotics

trade and corruption, weigh on Mexico’s prospects as an investment destination. Violent

crime was up 11% from 2010- 2011, mainly due to drug trafficking.

• Government income is overly reliant on the oil sector, as the oil sector represents

approximately one third of Mexican government revenues. Production continues

to decrease as domestic consumption increases which heightens the need for tax reform

near-term.

After analysis reliable data that are available we found that political risks that exists are

moderate.

Economic risk:

There are different kinds of economic risks exists. They are

Given below:

Exchange controls

Local-content laws

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Import restrictions

Tax controls

Price controls

Labor problems

Political sanctions

• Mexico has the second largest economy in Latin America, behind Brazil. It has the third

highest GDP per capita behind Chile and Brazil.

• The Mexican economy is highly reliant upon that of the United States. In conjunction

with the U.S.-led global financial crisis, weak growth in Mexico in 2008

was followed by a sharp contraction in 2009. Growth has rebounded and is expected to be

moderate going forward

in the 3% range near-term.

• Inflation pressures have eased significantly, allowing for more expansionary monetary

polices. In addition, Mexico

has a large output gap so any increase in demand should be met with greater output not

inflation.

After analysis available information we found that economic risks in Maxico is low

Financial System Risk: • The insurance industry is regulated by the National Commission of Insurance and

Finance (CNSF).

• Mexico, together with Brazil, represents approximately two thirds of all insurance

premiums written in Central and South America.

• The Mexican banking system has become more stable over the past ten

years, reflecting the results of the imposition of rules-based frameworks intended

Source: IMF and A.M. Best to strengthen bank balance sheets.

Moderate type of financial risk are exists in Maxico.

Specific source risks:

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Specific source of risks that Risks are involved in maxico may include:

Battlefield hazards such as crossfire, landmines, cluster bombs, booby traps, and

artillery and air strikes;

terrorist bombings;

abduction for ransom or political gain;

dangers posed by crowds, including the possibility of sexual assault, theft, tear

gas attack, or violence;

traffic hazards (the leading cause of unnatural deaths worldwide);

border crossings and other interactions with potentially hostile or undisciplined

armed groups;

physical surveillance leading to abduction or identification of sources;

electronic surveillance and interception of information or sources;

potential trustworthiness and loyalties of sources, drivers, fixers, witnesses, and

others;

common crime, including the types of incidents;

natural hazards, such as hurricanes and floods;

Health risks ranging from water-borne diseases to AIDS.

Ways to Reduce Risk:There are steps we can take to manage or minimize risk. It's important that these actions follow

policy and procedure, and that they be done properly and in a timely manner. These steps

include approvals/authorizations, reconciliations, reviews, asset security, segregation of duties

and controls over information systems. See Related Information for details.

These controls must be implemented thoughtfully, conscientiously and consistently, keeping a

focus on the concern or potential problem. It's also essential that unusual conditions identified

as a result of performing control activities be investigated and appropriate corrective action be

taken.

Actions can be either preventive or detective. Both types of responses are essential to an

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effective internal control system. Preventive actions are proactive and improve

quality. Detective actions indicate whether preventive actions are working and help prevent

losses.

Preventive actions attempt to deter or prevent undesirable events from occurring. They

are proactive controls that help to prevent a loss. Examples of preventive controls are

separation of duties, proper authorization, adequate documentation and physical control

over assets.

Detective actions attempt to uncover undesirable acts. They provide evidence that a

loss has occurred so that the problem can be identified and addressed. Examples of

detective controls are reviews, analyses, variance analyses, reconciliations, physical

inventories and audits.

Transportation:

Transportation is the physical movement of goods and people between two points.

Each of the five modes of transportation exists because of certain attributes that

provide one or more advantages over the other modes of transportation. The

attractiveness of a particular mode depends on the following attributes: cost,

speed, reliability, capability, capacity, and flexibility.

Transportation Modes:

Airfreight

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Motor Carrier

Ocean Transportation

Railroad

Airfreight:

Air is generally the fastest mode of transportation for shipments exceeding 600

miles. Air Cargo comprises a large number of daily flights in the United States

and are operated by private parcel companies such as FedEx and UPS.

Air Freight Capabilities:

Wearing apparel

Electronics

Printed matter

Machinery and parts

Cut flowers and nursery stock

Auto parts and accessories

Fruits and vegetables

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Metal products

Photographic equipment

Airfreight Advantages:

Make up lost time

Perishable products

Urgent deliveries

Airfreight Disadvantages:

Expensive

Line-haul cost of airfreight service

Transportation cost

Transit time

Increasing handling costs

Increasing loss and damage

Belly freight

Motor Carrier (trucks):

The trucking industry provides an essential service to the American economy by

transporting large quantities of raw materials, works in process, and finished

goods over land, typically from manufacturing plants to retail distribution centers.

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Motor Carrier Advantages:

Flexibility

Ability to deliver the product to the customer

Motor Carrier Disadvantages:

Limitations by highway weight and size.

Speed limitations and hours-of-service (HOS) rules.

Highway congestion

Cargo Ships:

A cargo ship, also known as freighter, is one that carries cargo, goods and

materials from one port to another.

The largest volume of the international trade is carried by thousands of cargo

ships through the world’s oceans, seas and lakes.

Types of Cargo Ships:

Bulk Carriers

These ships are designed to transport unpackaged bulk cargo such as cement, ore,

grains and coal.

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40% of the world’s merchant fleets.

Container Ships

These cargo ships carry intermodal containers that can be carried by land.

Containers vary from 20 to 40 feet in length.

Lake Freighters (Lakers)

Lakers are bulk carriers that transport goods through the Great Lakes.

The number of Lakers in operation has been reduced due to the Saint Lawrence

Seaway, that allows access of ocean-going vessels to the Great Lakes.

Unloading Container Ships:

Port cargo cranes are used to unload containers from cargo vessels.

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Railroads:

Freight trains benefits the nation’s economy, transportation system and

environment. However, its use is reduced by lack of flexibility, often by the need

of transshipment at both ends of the trip due to lack of tracks to the point of pick-

up and delivery. Authorities often encourage the use of cargo rail transport due to

its environmental profile.

U.S. Domestic Freight Movement:

Rail Types of Freight Services:

Bulk Unit Train

Moves very high volumes of a single commodity

Coal, grain, minerals and waste

One way (shipper to receiver)

Mixed Carload

Moves a diverse range of commodities.

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Chemicals, food products, forest products, metals, auto parts, waste and

scrap.

One way (shipper to receiver)

Intermodal (container, trailer and automobile)

Moves truck trailers

Almost anything that can be pack in a truck or container like: finished

consumer goods, refrigerated foods, tools and parts for manufacturing and

raw materials.

Two way

Railroads Advantages:

Rail adds transportation system capacity and reduces highway costs

Rail promotes economic development and productivity

Rail supports international trade

Rail is more fuel efficient and generates less air pollution per ton mile than trucks

Rail improves safety and security by offering a naturally separated right-of-way

for freight.

Reduces truck travel, congestions, and highway costs.

Railroads Disadvantages:

Railroads currently are used primarily to haul bulk quantities of cargo and intermodal

containers over long distances. Unless a manufacturing facility has a direct connection to

the railroad, the remainder of the trip must be handled by truck. With today's demand for

“just in time” freight, shipment by rail sometimes cannot meet the rapid and flexible

demands of industries.

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After complete our study we found that among all the transportation aircraft is the best.

Because we compare all the transportation on the basis of cost, speed, cargo safety and

flexibility .After that we come to a decision that aircraft is best although it’s cost is high

than other transport.

Distribution Procedure:

For distribution some procedure must be follow. Some of this steps are briefly describe

below:

1. Product Distribution Function: Coordinate Release Request letter.

Route request letter to the Test Function upon receipt. Provide release number assigned

in Product Assurance Real-time Information System (PARIS) to the Project Manager.

2. Test Function and Operational Test Organization (OTO): Perform

Qualification Test and Evaluation (QT&E) and Operational Test and Evaluation

(OT&E).

Accept the release package from the Project Configuration Manager. Perform QT&E and

OT&E. Turn in final Release Package to the Product Distribution Function.

3. Product Distribution Function: Process final Release Package.

The Product Distribution Function will receive final Release Package from the Test

Function. Update the release tracking tool concerning shipping status. Create cover

letter and approve final release package for shipment.

4. Product Distribution Function: Perform life-cycle support.

The Product Distribution Function will create release package folder. Provide release

reshipment support. Provide mail support for non-software packages and process re-

releases.

Exit Criteria:

The following work product is a result of completing this procedure:

Completed and distributed Release Package

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Channel of distribution in Mexico:

When in Mexico – do as the Mexicans do. So at first we follow this rule. A channel of

distribution or trade channel is defined as the path or route along which goods move from

producers or manufacturers to ultimate consumers or industrial users. In our business, this

channel consists of producers, consumers or users and the various middlemen like

wholesalers, selling agents and retailers who intervene between the producers and

consumers.

Our business has a number of alternative channels available for distributing our products.

These channels vary in the number and types of middlemen involved.

These channels of distribution are broadly divided into four types Producer-Customer,

Producer-Retailer-Customer, Producer-Wholesaler-Retailer-Customer, and Producer-

Agent-Wholesaler-Retailer-Customer. Here, we follow the third one because this is the

most common and traditional channel of distribution. Under it, two middlemen

wholesalers and retailers are involved. Here, we the producer sells product to

wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the

ultimate consumers. As this channel is suitable for the producers having limited finance,

narrow product line and who needed expert services and promotional support of

wholesalers we use this channel.

As an entrepreneur we choose this channel of distribution for our product such that the

channel chosen is flexible, effective and consistent with the declared marketing policies

and programmes of our firm. While selecting a distribution channel, we have compare the

costs, sales volume and profits expected from alternative channels of distribution .On the

other hand, as our firms producing a narrow range of products we will distribute products

through wholesalers and retailers. We use both the indirect and direct selling method.

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Marketing Intermediaries:Marketing intermediaries, also known as middlemen or distribution intermediaries are an

important part of the product distribution channel. Intermediaries are individuals or

businesses that make it possible for the product to make it from the manufacturer to the

end user, essentially facilitating the sales process. The principal advantage of indirect

marketing for a smaller company is that it provides a way to penetrate foreign markets

without the complexities and risks of direct exporting.

Commission Agents:

The agent as a marketing intermediary is an independent individual or company whose

main function is to act as the primary selling arm of our product and represent the our

product to users. Agents take possession of products but do not actually own them.

Agents usually make profits from commissions or fees paid for the services they provide

to the product and users.

Export agents, merchants, or re-marketers:

Export agents, merchants, or re-marketers purchase products directly from us, packing

and marking the products according to their own specifications. They then sell overseas

through their contacts in their own names and assume all risks for accounts.

DIRECT EXPORTING:

When we achieve this goals like more control over the export process, potentially higher

profits, and a closer relationship to the overseas buyer and marketplace then we use direct

selling methods. Because it needs more time, personnel, and corporate resources than are

needed with indirect exporting. We make internal organizational changes to support more

complex functions. Once a company has been organized to handle exporting, the proper

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channel of distribution needs to be selected in each market. These channels include sales

representatives, agents, distributors, retailers, and end users.

Sales representatives:

At first we hire a sales representative who uses the company's product literature and

samples to present the product to potential buyers. The representative would be handled

many complementary lines that do not compete. The sales representative usually works

on a commission basis, assumes no risk or responsibility, and is under contract for a

definite period of time (renewable by mutual agreement). The contract defines territory,

terms of sale, method of compensation, reasons and procedures for terminating the

agreement, and other details. The sales representative may operate on either an exclusive

or a nonexclusive basis.

Distributors:

We will get connected with the foreign distributor is a merchant who purchases

merchandise from an exporter (often at substantial discount) and resells it at a profit. The

foreign distributor generally provides support and service for the product, relieving the

export company of these responsibilities. The distributor usually carries an inventory of

products and a sufficient supply of spare parts and maintains adequate facilities and

personnel for normal servicing operations. The distributor typically carries a range of

noncompetitive but complementary products. End users do not usually buy from a

distributor; they buy from retailers or dealers.

The payment terms and length of association between the export company and the

foreign distributor are established by contract. Some export companies prefer to begin

with a relatively short trial period and then extend the contract if the relationship proves

satisfactory to both parties.

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Foreign retailers:

We will sell directly to a foreign retailer, although in such transactions, products are

generally limited to consumer lines. The growth of major retail chains in Mexico has

created new opportunities for this type of direct sale. The method relies mainly on

traveling sales representatives who directly contact foreign retailers, although results may

be accomplished by mailing catalogs, brochures, or other literature. The direct mail

approach has the benefits of eliminating commissions, reducing traveling expenses, and

reaching a broader audience. For best results, we will use direct mail to reach foreign

retailers should support it with other marketing activities.

We will ties to major domestic retailers who may also be able to use them to sell abroad.

Mexico large retailers maintain overseas buying offices and use these offices to sell

abroad when practicable.

Through these intermediaries the consumer of Mexico will get our product. The

consumers of Mexico are the end users of our product.

The Media in Mexico:There are a lot of media available to promote our product within Mexico. Mexico has

quite a lot of newspapers, both national dailies and regional papers. These are Mexican

buyers of products and services promoted by mail, fax, phone, and Email at addresses in

Mexico. Mail houses, telemarketing outfits, door-to-door agents who distribution and

fulfillment houses, international courier and forwarding agents, who are contracted to

deliver products ordered through direct marketing means. Mexico's media were

traditionally dominated by the Television group. Mexico is one of Latin America's

biggest internet markets. There were nearly 35 million internet users by the end of 2010 -

a 30% penetration rate. Facebook is one of the most popular media for promoting

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product. We can also give free samples of some school in Mexico so that we can promote

our product. We can also advertise our product on some special occasions through

campaign so that our can be promoted.

Legal restrictions involving advertising in Mexico:

Advertising in Mexico is governed by multiple bodies of law. Certain laws and

regulations are applicable into specific States within the Republic of Mexico. All of them

are focusing to establish the form and manners for producing and communicating

advertising of products and services in Mexico. For example, Mexico’s law bans most

means of tobacco advertising and promotion but provides an exemption for advertising

and promotion aimed only at adults through adult magazines, personal communication by

mail or within establishments exclusively for adult access.

From all of these mentioned regulatory frames, the Federal Law for the Protection of

Consumers is of particular importance since it can be considered as the main legal source

establishing the very general rules to be observed for advertising a product or service. 

Article of this media establishes that advertisement of products or services must be

truthful, verifiable and it must not contain texts, dialogs, sounds images, marks,

geographical indications and other descriptions that could induce consumers to errors or

confusions.

Comparative advertising is allowed by the company provided that the information about

the products or services being compared is not "deceptive" or "abusive".  "Deceptive" or

"abusive" information is defined by the law as that inducing consumers to error or

confusion due to the inexact, false, exaggerated, artificial or tendentious form in which

information is presented to consumers.

The mentioned general principles have full application in the industrial property field.

Regarding comparative advertising, when it is done without observing the rule of not

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providing "deceptive" or "abusive" information in respect of the product or service being

compared in the advertising to gain commercial advantages. 

Thus, regarding patents, advertisement must be accurate and must not exaggerate or have

erroneous indications to create false expectations about the patented product or process

offered to consumers.

The same trend must be followed in the trademark field. Advertisement must be accurate

and must not create error or confusions on consumers believing that they are acquiring a

product or service under the wrong assumption that they have characteristics or elements

better than the real ones or under fictitious conditions apparently better than the ones

offered by competitors. So we will be cautious about advertising our product by

following the rules of the media in Mexico.

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Conclusion

After preparing this report we learnt about how to analyze a foreign market. On the basis

of these analysis we can export our product effectively and efficiently. We have also

learnt a lot about Mexico. And if we want to export other products in Mexico these

learning will help us a lot. At last we can say that foreign market analysis is very much

essential for profit maximization and cost minimization in a foreign market.

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Recommendation

Mexico has the 2nd largest economy in Latin America and there is a huge demand of spicy

products. We might face some problems in Mexico. But if we analyze the market

properly and can take effective steps, we can overcome the problems. The problems we

might face are:1. Legal problems

2. Monetary problems

3. Political and economic risks

4. Transportation problems etc.

We have already discussed this problems and how we can solve this.

Mexican people love spicy foods and it has a stable economy. So we have a great

opportunity. So according to this analysis we can decide our marketing strategies and

steps and can apply them into this market.

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Bibliography:1. Philip R. Cateora & John L Graham, International Marketing(13th edition)

2 Philip Kotler & Gary Armstrong, Principles of Marketing(13th edition)

References: 1.http://popularmexicanfood.blogspot.com/

2. http://acapulcos.net/interesting-mexican-cuisine-facts-and-history/

3. http://popularmexicanfood.blogspot.com/

4. http://www.statista.com/statistics/200757/distribution-of- languages-in-mexico/

5 : http://www.worldbank.org/en/country/mexico/overview