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Gallardo's Goes to Mexico
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Gallardo's Goes to Mexico

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  • In thesalsas,sauces,andseasoningscategoryinthefoodsbusiness.Restaurantserviceandpackagedfoods.Originated from a small family-run restaurant in Texas, Gallardo’s has a strong presence in southwest U.S. before the current CEO turned the restaurant into a large company. The CEO had a sense that this restaurant could become a success with its quality foods and American consumers. After the acquisition of Gallardo’s, he keeps the restaurant operating because it’s an important way to connect with customers and test their products. - Distributionchannels:Gallardo’sretailrestaurantSupermarketsSpecialtystoresNationalrestaurantchainsPositioning in Texas is that Gallardo’s is a versatile SSS brand that offers valueproductstopremiumsineachsignificantpricepoint. In order to grow the company outside the saturated American states where Gallardo’s had exhausted the market potential, the CEO decided to enter the Mexican market first by purchasing Hermosillo,asmall, regional company with a 40% seasoning / 25% salsas & sauces market share innorth-centralMexico. Which is quite successful.tobephasedout. To use Hermosillo’s manufacturinganddistributioncapacity to build Gallardo’s brand, because the CEO felt the Gallardo’s brand had an “aspirational quality.”
  • Average annual growth rate of 20% in Mexico.Dropped $8 million probably because of phasing out Hermosillo brand.
  • Only 10% - 15% of salsas and sauces are ready-to-eatMore than 50% gross margin for this categoryNo high-tech equipment needed to enter the marketNew competitors make the market competitive. One of the new players Cholula has succeeded with a low price strategy.
  • Saltness
  • AMERICAN PROJECT: MEYER WANTED TO test HBS concept of segmenting the market by jobs people doVive: a 50 cent chocolate protein packed energy Target audience: Custodial/ factory workers/ Hispanics/ low incomeGoal: Help reinvigorate workers after a long shiftOriginally they called the bar vive but it didn’t do well so they changed the name to vive 4:00! To clearly convey the purpose of the bar Concept connected with people through advertisementsDecided this was successful because the customer could easily see that this product filled a job 2 years it leveled off at 30 millionMeyer wanted to try segmenting the market by the jobs people do with Gallardo'sInspired by Vive 4 O CLOCK MEYERS GOAL WITHIN HIS 6 GALLARDO’S ads was to demonstrate that the salsas, seasonings and sauces could be used to fill a need; that they can be hired for a job!But this strategy failed because the commercials ultimately HELPED California!
  • Meyers believed that understanding the Psychographics of his customers was critical.Gallardo’s products were making the most $ in supermarkets. This success in the U.S. indicates American’s love of prepared foods Ease and Convenience in the kitchen.Mexican housewives favor FLAVOR over convenience and often grew, harvested and cooked their own foods. Aromas, FlavorsThe whole cooking process is a very important part of Mexican culture and symbolizes creativity, love, appreciation and gives immense fulfillment.Some alterations were made to Gallardo's as a result; some sauces were made to be stirred for a long time to maximize the interaction that a woman would have with the food, which symbolized love and fulfillment. She may feel like she has more control of it too.
  • Add notes about distribution channels: Come to a conclusion before questions. Jobs, needs, advertising results, target audience, distribution channels, THIS GUY FAILED. About ¾ of Mexican population is in urban areas AND this is where the modern trade isIn these urban areas people want to make cooking easier, and they want to cook smarter not harder/ the urban population wants to prove themselves by cookingPeople in a higher social class in the cities are more likely to order in foodPeople in the countryside and rural areas tend to grow, harvest and prepare there own food. This is where the general trade is….Which audience should Gallardo’s target, the country or the city? DO you think the jobs to be done ad strategy is fit for Mexican audiences?
  • Once Meyer formed a Mexican and Mexican-American sales and managing team, he developed a day-long training seminar on the jobs-to-be-done concept to train his team. After everyone was on board, the marketing team conducted 1:1 interviews with consumers asking them to tell a specific, detailed story about a situation they found themselves in lately when they bought or prepared and when they used salsas, sauces, and seasonings. Next, they followed women around for several days to observe the situations in which they used these products. From these observations, they made 3-4 page “mini-case” descriptions of the situations that the women used the product in, not of the consumers themselves.
  • Once these studies were completed, the researchers began a pattern-making exercise by segmenting the findings into different situations that they had observed. After six piles were outlined, they studied the details of the cases including demographic characteristics, emotional, psychological, and functional needs, the roles of cooking aids used, and how cooking aids can help. By segmenting these groups, the researchers sought to find that consumers would “employ” products to meet their needs and satisfy their desires.Then, these groups were further consolidated into three fundamental jobs that arose in consumers’ lives: Job #1- This group represented the women who used cooking as a way to express their creativity. By doing this, they reinforced their self-esteem and expressed their love for the family. For this group, the aroma of the cooking of the salsa and sauces was meant to symbolize love. Job #2- This group represented the women who wanted to appear as though they took a long time to prepare the meal so that those who consumed it would consider her a talented, careful, and experienced chef, even if she wasn’t necessarily. Job #3- This group of women wanted to deliver satisfying meals but didn’t believe they had the time or the desire to prepare it. The researchers understood that many quantitative factors could have gone into their search but decided upon purpose because they intended to develop an instinct for the underlying constructs. Finally, researchers asked the women they had observed later if they could recall a time when they felt the need to prepare a meal that didn’t require salsas, sauces, or seasonings. By seeking out these products and actions that were real competitors, the researchers were able to refine their sense for what the real job was.
  • Once the job segments had been identified, the next task was finding the size of the groups. Here, however, is where researchers ran into some difficulties. Where one woman was categorized as falling into a Job 1 segment, she said at one point or another she could find herself falling into Job #2 when cooking a dish she had never prepared before and vice versa. Therefore, these normal methods for quantifying the size of the market segments (such as counting the number of people in demographically defined segments, or calculating the value of products shipped or sold by product category) could not be used.To deal with the issue of quantifying the segments, researchers purchased data from a market research company that segmented the market by consumer demographics. Next, they developed a personal-interview survey of consumers in these respective segments, asking them how frequently they found themselves needing to do these jobs. Net, they weighted their responses according to their proportion in the population. Unfortunately, it was not possible to simply divide the size of the known seasonings, salsa and sauces market by those percentages since many other products were hired to do those jobs.This resulted in the team judgmentally assessing how frequently the other products were hired instead of salsa and sauces for each jobs to come up with rough estimates for the total potential size of these job markets. By guessing that the total market value of the products hired to do these jobs was about $3.5 billion, the team named Job 1, “Express my talent and love” which was 65%, Job 2 as “help me be better” and Job 3 as “Phone it i”.
  • In conclusion, what needs did Gallardo fill? (participants answer) Essentially, Gallardo, an American company, moved to Mexico and attempted to sell their product to a new group of women whose approach to cooking was much different than American women's. While Americans see Gallardo’s product in aiding in the cooking process, making cooking quicker and tastier with less work, Mexican women take pride in their cooking and found Gallardo’s product to be unnecessary for a job they can and wanted to complete themselves. By attempting to transpose the American culture on the Mexican culture, Gallardo missed the mark. Similarly, the segmenting the market by jobs to be done wasn’t applicable to this situation.After the researchers were done with their testing, was it a good decision to target women who fell in the category of Job #1? (participants answer) This market has 65% of the total market value.

Transcript

  • 1. Gallardo’s Goes to MexicoChao | Fan | Perlmutter | SweeneyMK639 Brand Management
  • 2. Company In the foods business Gallardo’s fast-food restaurant Values to premiums 2000: Hermosillo
  • 3. Questions Was it a good strategy for  What could Gallardo’s do Gallardo’s to enter the with the brand Hermosillo? Mexican market by purchasing Hermosillo?
  • 4. Company Market Share Revenue USD Million Gallardo’s 15% 42.2 Small Players 10% 25 17 California 75% 2001 2002 2004 Mexican ready-to-eat products of salsas, sauces, and seasonings 20% annual growth
  • 5. Climate Trends Challenges Potential market  To upgrade the market to higher-value-added products 20%+ annual growth  To displace California High gross margin Low entry-threshold New competitors, Cholula
  • 6. Competitors Brand Gallardo’s California Package 10 ounce 9 ounce Recommend Selling Price 13 9 Price to Retailers 10.4 7.4 Price to Distributors 9.6 6.8 Inventory turns (est.) 3 days 20 days VALUE?
  • 7. Questions How can Gallardo’s differentiate itself from California?
  • 8. CollaboratorsDistribution Channels Modern TradeSSS Market 10% Modern Trade 39% General Trade 10% General Trade 90%
  • 9. Questions How can Gallardo’s fix the discrepancy in their distribution channels?
  • 10. Segmenting the Market By Jobs NEED SOLUTION = VIVE 4:00!
  • 11. Target Audience Mexican vs. American
  • 12. Target Audience City vs. Country
  • 13. Questions Which audience should  Do you think the jobs-to-be- Gallardo’s target, the done ad strategy is fit for country or the city? Mexican audiences?
  • 14. Initial Segmentation ApproachPersonal Interviews Observation Mini Cases
  • 15. Segmenting by Jobs Six Situations
  • 16. Second Approach Research Methods Result Purchase data Personal Interview Survey
  • 17. Conclusion What needs did Gallardo’s fill?  Can you think of a better way to segment the market and find a need?  How is Gallardo’s positioned in the minds of Mexican consumers?
  • 18. End.