mkt430 rapanui global mkt plan

Marketing Plan for Sapindale Growers

Exporting California Pistachios to Rapa Nui

Kelly Unruh

MKT 430: Introduction to Global Marketing

California Pistachios 1

The Marketing Plan

Sapindale Growers, a Southern California pistachio orchard, is expanding

globally. The first global market to enter will be the tiny island of Rapa Nui, a providence

of Chile, in Polynesia. Introducing the California Pistachio to Rapa Nui will prove to be a

much worthwhile endeavor. The island of Rapa Nui is the most isolate inhabited island in

the world. Being “more than 2,000 miles off the coast of South America,” almost all of

their food and supplies are imported (Trachtman, 2002, par 4). A majority of the food

will come from Chilean farms. Agriculture is one of Chile’s main industries, however

exporting to other Latin American countries makes up 18% of their total share (Brooks,

Cervantes, & Migotto, 2008). This is important to Sapindale Growers in that Chile does

not produce pistachios and it leaves Rapa Nui open to trade with other countries. These

reasons will help build the marketing plan for marketing and exporting California

Pistachios in Rapa Nui.

Marketing Objectives Pistachios are not currently grown in either Rapa Nui or

Chile, making this a new market to learn about and consume a new product. When

introducing pistachios to Rapa Nui, the health benefits should be stressed as well as

addressing the issue of the shells and how to properly dispose of them. The target market

will include local Rapa Nui who are prone to cardio vascular disease and diabetes, two

diseases high among the islanders (“Easter Island (Rapa Nui),” 2007).

Within the first 5 years of marketing pistachios in Rapa Nui, the sales and profit

forecast should see a steady increase year over year. The profit forecast would also need

to take into have a budget that accounts for flexibility in the overhead costs, such as

personnel and transportation costs. Because this is a new market for Sapindale Growers,


seeking out an expert opinion in the importing trade to Rapa Nui as well as that of the

American Pistachio Growers will help to provide historical data to forecast upon. Rapa

Nui has around over 4,000 inhabitants with an annual total of 50,000 tourists, the goal of

the market penetration will be to reach a large majority of the locals and about half of the

visitors (Ross, n.d.). The coverage will be focused on the island’s main village and

outlying areas.

SWOT Analysis The SWOT Analysis sets out to capture all the key elements

needed to achieve the marketing objective. The strengths for marketing pistachios in

Rapa Nui are the health benefits of the product and knowledge of the product by the

incoming tourists. Weakness in marketing pistachios is the by product of the used shells

and how to dispose of them on an island. Another weakness would be the slow rate of

acceptance by the islanders. Areas of opportunity include messaging on additional usages

and benefits of the pistachio, such as using them as an ingredient in cooking and baking.

Lastly, possible threats include spoilage during shipping and unknown allergic reactions

to the pistachio by the islanders.

Product Adaptation or Modification The pistachio itself will not be modified too

much from current domestic varieties. Possible different flavor blends that are

complement local islander tastes, like a sweet and savory version using coconut oil, can

be added to the product portfolio. Current varieties and flavors will also be exported into

Rapa Nui. The packaging of the pistachios will follow the labeling guidelines of Chile.

Knowing that Spanish is the predominate language spoken on Rapa Nui, all packaging

will be bilingual in Spanish and English. The creative elements of the packaging will

follow that of the US versions, with slight variations to reflect the culture of Rapa Nui.


Research of the Chilean trademark and patent laws will be done to be sure that Sapindale

Growers is not infringing on any current marks. The actual packaging will be adapted to

be more eco-friendly by usage of biodegradable materials to minimize on the amount of

waste. Sapindale Growers aims to reduce its carbon footprint wherever it can. Initially,

Sapindale Growers will continue to support the Rapa Nui export of pistachios out of the

Southern California headquarters, with one sales representative located on the island. As

sales increase, there will be a need to expand the local presence.

Promotion Mix The key to the promotion mix is that it “is all about

communication” (Riley, 2012, par 2). Sapindale Growers will need to find the balance of

awareness and persuasiveness within their communication to this new market. Tactics in

each of the core areas of the promotion mix will be utilized and modified as continued

growth in Rapa Nui is seen.

Advertising Sapindale Growers will look to utilize a mixture of in-home,

in-store and out-of-home advertising vehicles. Print ads in the local papers and magazines

will be purchased. Geo targeted digital banners will be also help drive the Rapa Nui back

to the Sapindale Growers website for more information and a local store directory. In-

store, Sapindale Growers will leverage shelf signage and shipper displays, where

applicable. Shipper displays will include tear pads with helpful information and recipes.

Specially designed racks will also be placed at point-of-sale for that last minute impulse

buys. Bus and car wraps will include eye-catching graphics to garner awareness for the

brand. TV will not be considered in the first few years due to cost and effectiveness.

Radio will be explored as Sapindale Growers gains a better understanding of the

everyday life in Rapa Nui. There will be two distinct advertising messages. One message


will focus on the awareness of pistachios and building the Sapindale Growers brand.

These messages will be found in more general areas. The other message will focus more

on the health benefits and will be a little more targeted to specific segments of the

market. Sapindale Growers will work with local media agencies to find the most cost

effective media mix.

Sales promotions In the early stages of promotion of Sapindale Growers

pistachios, sales promotions will be consumer and trade facing. A recent Nielson report

states that only 25 percent of Latin American shoppers will use coupons (“Global

consumers go sale searching and coupon clipping,” 2011, par 6). Understanding this fact

will help determine the types of sales promotions used. Product sampling through store

demos and within the community will contribute to a large part of the sales promotions.

Trade allowances and other one time discounts will be offered to the retailers to bring in

the pistachios and promote and sell them. As an added value to entice the customer to try

and purchase the pistachios, a premium of some sort, like a recipe book, will be offered at

time of purchase.

Other promotional methods Personal and direct selling may also be used.

The local Sapindale Growers sales rep will meet with the retailers to educate them on the

history and benefits of pistachios as well as the comprehensive marketing and advertising

program being offered. Street teams will canvas the island distributing free samples of the

pistachios to the locals and tourists alike. These street teams will be made up of young

Rapa Nui, outfitted in Sapindale Growers apparel and trained in how to market the

message.


Distribution: from origin to destination Rapa Nui is roughly 4,245 miles south of

Southern California. All of this distance is over open ocean (“Distance from Easter Island

to Los Angeles,” 2013). A distribution channel will most likely need to cover air, land

and sea. Rapa Nui is in the Central Time Zone, only two hours head of Sapindale

Growers, making real time conversations fairly manageable.

Port Selection All shipments to Rapa Nui will leave the Port of San Diego

and will arrive in the Hanga Roa port on Easter Island. Hanga Roa is an anchorage port,

meaning that all ships much anchor about a mile and half off the coast and take water

taxis to shore.

Mode selection A combination of air and motor carriers will be the best

modes of distribution for pistachios. There are no railroads in Rapa Nui. Ocean carriers

will take too long and risk possible infestation or spoilage of the pistachios. Air, although

probably most expensive due to the weight of the pistachios, will deliver the product to

Rapa Nui in a timely matter. Once landed, the pistachios will be distributed by local car

to the various retailers. Large 18-wheelers are limited on the island, so a large car or

service truck or van will suffice. A partnership will be created between both the air and

motor carries and Sapindale Growers. Companies like FedEx may prove to be more

expensive than a private airfreight carrier.

Packing Sapindale Growers pistachios will be packaged in both single

serve and multi-serve varieties. The outer case will be constructed so that it meets OSHA

standards in weight and size. Most cases will hold 24-28 containers of pistachios. Outer

cases will be clearly marked with manufacturer information, product and variety,

scannable UPC bar code, expiration date and lot code for tracking purposes. The


expiration date and lot code will match the cartons inside. Because the pistachios will be

air freighted to Rapa Nui, containerization is not needed. Shipping costs will be factored

into the total retail price of the pistachios.

Documentation required Various documents will be used and closely

monitored. All documents will follow both Chilean and the US policies for exporting.

The bill of lading will be generated by Sapindale Growers outlining the contents of the

shipment and serve as the documentation needed by customs. Dock receipts will not be

needed as they are for ocean freight, however an air bill will be needed, especially if

using FedEx. Commercial and pro forma invoices will help move the pistachios through

customs and keep the accounting books tidy. Other forms of declaration and origin will

be used as needed. Insurance claims will be managed closely for pistachios that arrive

damaged, spoiled or not arrive at all. As the quantities increase in the export of the

pistachios, a freight forwarder will be considered to help with the logistics of shipping

and paperwork.

Channels of distribution The distribution of the California pistachios will follow

the standard methods of Chile. Sapindale Growers will initially test the market by going

direct to the retailers and will adjust the plan accordingly.

Retailers Sapindale Growers will sell their pistachios to the two

supermarkets on the island as well as have a booth at the daily public market (“Hanga

Roa – Shore Services,” n.d.). Secondarily, the pistachios will also be sold in the sundry

shops of the local resorts. These retailers will reach out to the locals as well as the

tourists, both markets that Sapindale Growers is looking to reach out to. Sapindale

Growers will recommend that the retailers sell the pistachios based on the manufacturer


suggested retail prices (MSRP) or use their own standard markup, as they feel necessary.

Understanding that credit cards are not widely used on Rapa Nui may pose a problem

with doing business with these retailers, however, through the utilization of online

payment processing and working with the local bank, this should not pose an issue.

Wholesale middlemen In testing the various channels of distribution,

Sapindale Growers will not utilize a wholesale middleman in the beginning. As sales

grow and demand is greater than supply, the distribution plan will be revisited. However,

Chilean export agents may be utilized for their expert opinion on relevant topics of

markup, payment and scale of operation.

Warehousing Sapindale Growers will ship direct to the retailers, thus not

needing an abundance of additional warehousing space. For the product going to the

public market, the pistachios will be shipped directly to the local sales rep, who will also

be managing the presence at the market. As supply and demand increases, Sapindale

Growers will consider looking at warehousing at a port in Chile. Pistachios, however, are

not a commodity that warehouses well and should be delivered in a timely manner to the

end consumer.

Price determination Because pistachios are a commodity, the wholesale market

price will fluctuate with the growing season. The product that Sapindale Growers will be

exporting to Rapa Nui will be in a pre-packaged finished form, which will incur some

additional costs from the purchase of the raw ingredients. Careful consideration will be

made to make sure that the retail price is fair to the consumer yet is able to cover all the

costs to product and ship the product.


Cost of the shipment of goods The logistics carrier of Sapindale Growers

will calculate all the costs associated with the shipping of pistachios to Rapa Nui. The

carrier will create and issue pallet configuration drawings outlining the most optimal way

to pack and ship with minimal damage.

Handling expenses The handling expenses include all the additional costs

to ship the pistachios to Rapa Nui. The additional packaging, transit and labor hours will

be factored into these costs. Because Sapindale Growers will be shipping via FedEx to

Rapa Nui, pier charges and wharfage fees will not apply. These are charges added to

shipments when goods are shipped by boat and the boat comes in to dock. However,

standard loading and unloading charges will apply at the airport in Hanga Roa.

Insurance costs Following good business practices, Sapindale Growers

will carry an insurance policy for shipping. This will help cover the liability for any

unforeseen incidents during the transport and delivery of the pistachios to Rapa Nui.

Crossing such a large body of water at one time could prove to be risky at times,

especially during inclement weather. Insurance can also prove beneficial if the delivery is

blocked from moving the pistachios from the airport to the retailers due to some sort of

political or social unrest.

Customs duties Chile has various added costs, import duties and taxes, on

imported items. The amount paid is “calculated on the complete shipping value, which

includes the cost of the imported goods, the cost of freight and the cost of insurance”

(“Import duty & taxes when importing into Chile,” 2013, par 1). All products are coming

into Chile are subject to these taxes.


Wholesale and retail markups and discounts Sapindale Growers will not

have any wholesale markups or discounts, but will encounter retail markups and

discounts. Typically when working with a wholesaler, Sapindale Growers will sell the

pistachios at a price higher than what it cost to produce the product. The wholesaler will

then add a markup and charge the retailer a slightly higher price. To cover their needs, the

retailer then sets the selling price at a percentage higher than what they paid for. By not

having a wholesaler in this model, the final price to the consumer will be lower.

Company’s gross margins Sapindale Growers’ gross margin is the profits

after all the other costs are accounted for. This is the formula that all sound businesses

plan for – total sales revenue minus cost of goods sold, divided by total sales revenue.

The result is a percentage of the total sales revenue. In other words, the portion of the

dollar that stays with Sapindale Growers.

Retail price Sapindale Growers will offer the retailers of Rapa Nui a

MSRP, having already taken in account of all the costs associated with the pistachios

from growing to shipping, including any marking costs. The retailers can follow the

MSRP or opt to charge their own retail price.

Terms of sale The terms of sale used by Sapindale Growers will be drafted by the

staff legal counsel and will outline the company’s standard delivery and payment terms.

Since this will also be an international partnership, specifics guidelines regarding the

transportation will be included.

EX works, FOB, FAS, C&F, CIF The International Chamber of

Commerce has created a standard set of terms of sale, in which Sapindale Growers will

adhered to the ones most applicable. EXW (ex works) puts the responsibilities of the sale


on the buyer and not on the seller in that the buyer is responsible for the transportation

and associated costs. FOB (free on board) is the designation that the seller ships the

product via the specified carrier as determined by the buyer. FAS (free alongside ship)

deals when shipping by sea and the seller has already cleared the goods. C&F (cost and

freight) is also for sea shipment and is when the seller pays for all costs and freight for

the buyer. CIF (cost, insurance and freight) is the same as C&F with the additional costs

of purchasing insurance by the seller.

Advantages/disadvantages of each The above-mentioned terms of sale all

keep the risk of the sale on the seller and not on the buyer. The buyer is able to define the

sale of goods on their grounds. In relation to the pistachios by Sapindale Growers, since

shipping by sea will not be used, many of these terms of sale will not come into play.

Sapindale Growers was already going to assume the responsible of the shipping costs as

calculated into the product price. If the retailers of Rapa Nui have a logistics partner other

than FedEx that they would prefer to use, then Sapindale Growers would be open to that

option.

Methods of payment As negotiated early on in the partnership, Sapindale

Growers will work with the retailers of Rapa Nui on the best possible payment options

that fit their unique needs. Cash in advance payments will only be used if a trend of late

or missed payments is had by the retailer. COD payments may also be applied in these

situations. Since this is a new business adventure and there is limited cash flow with the

retailers of Rapa Nui, open accounts will not be utilized. This method could be

detrimental to the growth of Sapindale Growers. Selling of pistachios on consignment

may not be a good practice. Buying on consignment puts no risk on the retailer and they


only have to pay for what they sold and return the rest. With a perishable item like

pistachios, it is not in Sapindale Growers’ best interest to sell on consignment. Sight, time

or date drafts are needed for letters of credit. If Sapindale Growers were uneasy about the

retailers not paying, then a sight draft should be used, yet not as enforceable with air

shipments. The time draft may be utilized by Sapindale Growers if they find that a

retailer needs a bit more time to pay. The date draft simply outlines when payment is due.

Letters of credit can prove to be beneficial for the Rapa Nui retailers in which their credit

risk is assumed by a US bank. If the retailer fails to remit payment for the pistachios, the

US bank will reimburse Sapindale Growers for the cost. With one bank on Rapa Nui, this

could pose a possible issue.

Pro forma financial statements and budgets

Annual budget forecasting by a company is done through pro forma financial

statements. These statements reflect future assumptions unlike the hard facts of a

historical financial statement. Pro forma statements are fluid and fluctuate during the

planning process. Pro formas include “the income statement, the balance sheet and the

statement of changes in financial position” (Rollins, 2012, par 1).

Annual pro formas will review and use the previous year’s financial statements as

a basis for creating the upcoming year. Changes in industry, logistics and economy will

adjust the amount of budget increase needed. Changes in inventory, accounts receivable

and the fixed assets are circulated and compared. Once the pro forma is completed, an

analysis will show if there are any potential red flags that may pop up in the coming year.

Having a completed pro forma will be a guide to see where budgets can shift along the

way, especially for any unforeseen issues.


Marketing budget A marketing budget will help build the Sapindale Growers

brand and pistachio product in Rapa Nui. Having an understanding of the current budget

and how much has been allocated to the marketing budget will help guide towards which

marketing tactics can be executed and which ones will need to wait. It will take some

upfront legwork to get all the estimated fees. Once the right budget is identified, then the

brainstorm of where to put those dollars happens. The skies the limit at this point, as the

marketing team is looking for all possible avenues for marketing, traditional and non-

traditional. After a few drafts and the marketing plan is complete, a review of the tactics

and their budgets is done. Each tactic is looked at based on ROI and the involvement to

execute. If something doesn’t fit overall, then it is either modified or replaced with

another marketing tactic.

Selling expense The selling expenses make up half of the operating

expenses. These include all the components of a sales force, including commissions and

salaries, office space and utilities and the creation and distribution of promotional

materials. Sapindale Growers will employ one local sales rep on Rapa Nui as well as an

internal sales team in the Southern California headquarters.

Advertising and promotion expense The advertising expense outlines all

the fees associated with the advertisements ran for that specific period. Advertising

expenses fall under the selling expense section in a budget. The promotion expense will

outline all the giveaways, like branded water bottles or t-shirts, given to consumers for

the campaign. Some types of promotional expenses can be tax-deductible, but will need

to be carefully reviewed to see it was truly not an advertising expense. As mentioned


earlier in this plan, Sapindale Growers will leverage in-home, in-store and out-of-home

advertising methods as well as promotional tactics through street teams.

Distribution expense The distribution expenses are all the costs associated

with the distribution of the pistachios from production in the orchards to the delivery to

the retailer on Rapa Nui. Upon review of possible distribution and transportation methods

to Rapa Nui, utilizing FedEx will be the best option. As pistachio orders for Sapindale

Growers increase, other methods of transportation will be explored.

Product cost The product cost of pistachios includes all the costs

associated with making them. This includes all the costs associated with the growing and

harvesting of the pistachios at the orchard. Then the transportation to the processing plant

for packaging is factored in. In terms of the balance sheet, these costs fall under the

inventory account. Once sold, the balance sheet converts the costs to expenses to be

matched to the sales revenue.

Pro forma annual profit and loss statement The pro forma annual profit and loss

statement is an important document and tool for every company to forecast the ability a

company has to generate profit. P&L statements are looked at monthly as well as

quarterly to make sure the business is staying on track. They are created annually,

typically 4-6 months before the new fiscal year. Identifying the annual revenue, the P&L

then subtracts the costs of running a business. The total of this equitation is the net

income profit.

Resource requirement

Sapindale Growers is a family owned company, who will build their company

with the most talented individuals in their respective disciplines. Sapindale Growers owns


a pistachio orchard in Southern California, complete with processing plant. A master

grower will oversee the day-to-day operations and sit on the executive committee. There

will also be a plant manager who oversees the scheduling and running of the processing

plant. This person will also sit on the executive committee. Both the farmer and plant

manager will have a staff of direct reports. Onsite at the orchards will also house the HR,

Finance, Sales and Marketing teams. The directors of each of these teams will make up

the rest of the executive committee along with the Sapindale Growers owners. Each team

will consist of individuals who exemplify the passion and dedication of the founders of

Sapindale Growers and work together to become a global brand.

Production capabilities of the orchard will be enough to keep Sapindale Growers

in the medium size range, being able to fulfill sales domestically and beginning to branch

out to international sales.

Executive summary

Sapindale Growers has put forth a sound marketing plan to pave entry into the

international market. By spending time early on in the research and budging phase,

Sapindale Growers will be able to make a successful launch into the Rapa Nui market,

offering a product that is new to the locals. Through advertising tactics, Sapindale

Growers will convey the message of the health benefits of the pistachio. As the locals

become more family and accepting of the pistachio, subsequent campaigns will focus on

other benefits. The channels of distribution will prove to be somewhat of a hurdle to

overcome as well as costs associated with tariffs and additional charges by the Chilean

government. Overall, entry into a global environment will prove to be beneficial and

profitable.


References

Brooks, J., Cervantes, D., & Migotto, M. (2008, March). Agricultural policy reform in

Chile. Organistion for Economic Co-operation and Development. Retrieved from

http://www.oecd.org/chile/40268283.pdf

Distance from Easter Island to Los Angeles. (2013). Time and Date. Retrieved from

(http://www.timeanddate.com/worldclock/distanceresult.html?p1=914&p2=137

Easter Island (Rapa Nui). (2007). Pacificislandtravel.com. Retrieved from

http://www.pacificislandtravel.com/easter_island/about_destin/people.asp

Global consumers go sale searching and coupon clipping. (2011, October 12). Nielsen.

Retrieved from http://www.nielsen.com/us/en/newswire/2011/global-consumers-

go-sale-searching-and-coupon-clipping.html

Trachtman, P. (2002, March). The Secrets of Easter Island. Smithsonian. Retrieved from

http://www.smithsonianmag.com/arts-culture/Mysterious-Island.html

Hanga Roa – Shore Services. (n.d.). Noonsite. Retrieved from

http://www.noonsite.com/Countries/EasterIsland/HangaRoa?rc=ShoreServices

Import duty & taxes when importing into Chile. (2013). Duty Calculator. Retrieved from

http://www.dutycalculator.com/help_center/Import-duty-taxes-when-importing-

into-Chile/

Riley, J. (2012, September 23). Promotional Mix – Introduction. Tutor2u.net. Retrieved

from http://www.tutor2u.net/business/marketing/promotion_mix.asp


http://www.tutor2u.net/business/marketing/promotion_mix.asp

http://www.dutycalculator.com/help_center/Import-duty-taxes-when-importing-into-Chile/

http://www.dutycalculator.com/help_center/Import-duty-taxes-when-importing-into-Chile/

http://www.noonsite.com/Countries/EasterIsland/HangaRoa?rc=ShoreServices

http://www.smithsonianmag.com/arts-culture/Mysterious-Island.html

http://www.nielsen.com/us/en/newswire/2011/global-consumers-go-sale-searching-and-coupon-clipping.html

http://www.nielsen.com/us/en/newswire/2011/global-consumers-go-sale-searching-and-coupon-clipping.html

http://www.pacificislandtravel.com/easter_island/about_destin/people.asp

http://www.timeanddate.com/worldclock/distanceresult.html?p1=914&p2=137

http://www.oecd.org/chile/40268283.pdf

Rollins, J. (2012, August 24). Proforma financial statements. AAUP Business Handbook.

Retrieved from

http://aaupwiki.princeton.edu/index.php/Proforma_Financial_Statements

Ross, J. (n.d.). Easter Island still attracts more tourists than it can handle. Canada.

Retrieved from

http://www.canada.com/travel/Easter+Island+still+attracts+more+tourists+than+h

andle/920477/story.html


http://www.canada.com/travel/Easter+Island+still+attracts+more+tourists+than+handle/920477/story.html

http://www.canada.com/travel/Easter+Island+still+attracts+more+tourists+than+handle/920477/story.html

http://aaupwiki.princeton.edu/index.php/Proforma_Financial_Statements

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