The spending per lbs per capita The premium

The USA

 

Evaluation criteria:

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1)    Chocolate consumption per capita

As Zotters primary product is chocolate it is relevant to assess the chocolate consumption per capita to find the best-suited country for expansion, as high consumption would be favorable.

 

2) Average spending on chocolate per capita

The chocolate Zotter produces is as mentioned earlier fair-trade and organic therefore also premium priced. Therefore we find it relevant to assess how much every capita on average spends on chocolate.

 

3) Average spending per lbs per capita

The premium pricing needs a market with a willingness to buy a product in this price range. Therefore it is relevant to assess the average price per capita spend per lbs to assess whether the customers buy large quantities or premium priced products.

  

4) GDP per capita

GNP per capita is a relevant measure to Zotter as the product is premium priced, and therefore can provide information upon pricing potential and attractiveness of the market as low GNP countries does not partake the same market potential for premium products.

 

5) Market size? – Amount of people in country

The size of the population and thereby the potential buyers is relevant as premium chocolate is often used as an occasional gift and therefore a large amount of potential buyers are relevant.

 

6) Country spending on organic foods

Zotter is one of the only chocolate producers in the world whose entire product range is fair-trade and organic. It is relevant to consider which countries has the highest spending on organic foods as this will tell us which countries considers this an added value.

 

7) Spending organic foods per capita

 

This is relevant for the parameter that not all markets have the same size, but perhaps there is a larger on average spending in some of the smaller nation than in a populous nation.

 

8) Cultural distance

One of Zotters core values is the family business. Therefore it is of crucial importance that a potential market will be within the families’ capabilities as these have very little internationalization experience.

 

9) Competition intensity

Zotter has a unique product and variants of the product. Therefore it is appropriate to find a market which has very little of this already. It is also relevant to see how strong the made in Austria brand is in the assessed country.

 

10) Ease of doing business

As the experience of internationalization is limited and control is preferred to stay within the family it is important that the ease of doing business is relatively high, so it will be possible with little previous knowledge.

 

The USA overall

As we know that the United States of America is a federal republic which is composed of 50 states and federal district and another smaller units. According to this fact, the USA is also one of the biggest market in the world. As the Zotter company is producer of a premium chocolate with big marks of innovation, the most important parametr is the chocolate consumption with all the others included. We need to realize, that the USA as a dominant country in North American continent and big player in every indusrty, the US is also a place where chocolate is already produced and the chocolate industry is fully self-sufficient. The question is wheter the Zotter is able to enter american market with their wide offer of differenced products. For our purpose we consider the USA as a one unit, one big market. Probabbly if the US fits our parametrs and became the candidate country to enter, we should enter into some states primarly.

 

The industry is represented in 35 states with particular concentration in Pennsylvania, New Jersey, Illinois, California, New York, Wisconsin, Texas, Virginia, and Ohio. The U.S. chocolate and confectionery industry is a principle consumer of key U.S. agricultural commodities. For every dollar of cocoa imported, between one and two dollars of domestic agricultural products are used in the making of chocolate. (World Cocoa Foundation, 2011)

 

Chocolate consumption per capita

As we can see in the graph the level of chocolate consumption per capita in the USA is the same level as in Austria. This is a good sign. The level of chocolate consumption per capita in the USA is 5,5 kg. There are also some of the countries with higher level of this parametr, but we need to go through all the parametrs to compare.

 

Source: https://www.statista.com/statistics/263779/per-capita-consumption-of-chocolate-in-selected-countries-in-2007/

 

Averege spending on chocolate per capita

This parametr is also important to see what is the customer attitide to purchase a chocolate bar. Thtough this parametr we are albe to find out how popular chocolate is in minds of

buyers.

 

 

 

As we can see in following graph, the chocolate spendings per capita in the USA is 56,8          $ per year in 2015. We can say that the USA scores low and the per capita spendings on chocolate is very low compared to other countries within the EU.

 

source: https://www.theguardian.com/news/datablog/2015/jul/19/which-country-spends-the-most-on-chocolate-bars

 

As we earlier said that Zotter is producer of premium chocolate with respect to fair trade and organic approach, there is no guarantee that this level of purchasing per capita would be enough for Zotter.

 

GNP

The USA is suitable with its GNP 58 030 $ which is higher value than Zotter’s target. This shows a big potential in the US market.

 

Market size

The USA is home of 323,1 million people. This fact shows big potential in the market with still growing population.

 

Country spending on organic food/ per capita

As the Zotter is producer of Organic chocolate this parametr is significant. From the graph we can see that the spendings on organic food is raising in the US through out the past years and in 2016 the spedings reached 43 billions $ per year. This means that the value of spending on organic food per capita was 133.1 $ in 2016.

 

 

source: https://www.statista.com/statistics/196952/organic-food-sales-in-the-us-since-2000/

 

Cultural Distance

As the Zotter company is family run business with low experience in internationalization the cultural differences can occur.

Source: https://www.hofstede-insights.com/country-comparison/austria,the-usa/

 

As we used the Hofstede Cultural Dimensions to see the differences within the Austrian and the US culture, we can see that the biggest differences occured in individualism dimension where Americans are more individualistic society. Another differences can be found in Long Term Orientation and Power Distance dimensions.

 

Competition Intensity

The Zotter is producing a unique product with basis of fair trade and organic approach. It is important to find out if there already are in the US market some of the producers of such a range of products or if the Zotter would be the first. We need to take in mind that in the US there can be found lots of chocolate confectionery producers. When speaking about the premium chocolate, the US market already contain few of producers. The fact, that there are some premium chocolate producers might be an advantage when introducing Zotter to the US market. People in the US are already familliar with premium chocolate what means that Zotter will souit the US market demand. The negative which results from presence of other premium chocolate producers is that the market share is already divided into most popular brands. In the table we can see that in the US market there are premium chocolate producers such as Lindt, Ghirardelli, Russell Stover, Whitman’s and Pangburn’s. These are the main producers and suppliers within the US chocolate market.

Source: https://www.candyindustry.com/blogs/14-candy-industry-blog/post/86340-how-will-lindts-acquisition-of-russell-stover-change-the-us-premium-chocolate-segment

 

Ease of Doing Business

As the table shows the US stands at the sixth possition in overall. The US stands second in rank of getting credit, third in resolving insolvency. The worst criteria is getting elektricity and starting business at 49th position.

 

Source: http://www.doingbusiness.org/data/exploreeconomies/united-states