Evaluate an International Expansion Strategy for Goya Essay

Goya, the largest Hispanic-owned company in the United States, has established itself as not just a popular brand of Hispanic food products but also has become the market’s standard of quality and competitiveness. Established in 1936 as an import company to supply the demand for authentic Mexican and Spanish cuisine, the company is now producing and developing its own products (Goya, 2007a). Despite the extensive competition from larger food manufacturing companies and the opening of American markets by European and South American suppliers, Goya has been able to maintain its market leadership and develop new products and markets (Goya Foods, 1999). One of the factors cited for the continued success of the company is its marketing strategies with the Latino community. Considering that the Hispanic community and consumers of Hispanic food products are expected to represent 25% of the United State’s retail food market by 2050, this competency is one that other companies would like to acquire for themselves (Hoffman, 2003, p. 5). The objective of this paper is to investigate the environmental marketing forces that Goya considers in developing its marketing strategies, how it characterizes different subgroups in its market and the merits of expanding its target market to non-Latino consumers. In doing so, the paper will be able to understand the perspectives and insights that Goya has used and has become instrumental for its success (Riell, 2007). Environmental Forces Prioritized Among the six environmental forces discussed, natural, technological, political and legal, economic, competitive, and socio-cultural, the last three that are considered the most in Goya’s marketing strategy. Though the other factors are also considered, they figure more significantly in the company’s corporate and operation strategies (Demetrakakes, 2003). Though they do not directly relate to the company’s marketing strategy, it should also be recognized that they can impact the market effectiveness of the company. Thus, Goya considers all of these environmental forces as important factors to consider (Hoffman, 2003). Economic Forces Economic forces are important to the company’s marketing strategy because of its interest in retail markets. The case study of the company presented by Hoffman points out that since the Latino market will represent a substantial chunk of the consumer market, they will exert greater demand for products and may in fact shift the market towards buyers. At the same time, the size of the market will also increase its attractiveness to new players as well as marketing requirements (Goya, 2007a). Thus, it has been important for the company to establish itself as the premiere choice of consumers and to have a great sensitive to the market. According to Andy Unanue, CEO-in-waiting apparent, the company’s sensitivity to the shifts in purchasing power and the rate of entry of alternative products has been critical. Schiantarelli’s (2005) study indicates that the company’s sensitivity to macroeconomic factors in its major markets allows it to maximize economic growth areas. In doing so, the company is not only able to sell itself but is also able to establish itself at times where markets tend to liberal. Michael (19980 that the strategy of targeting these developing economies also allows the company to reposition its mature products or specialize markets for particular products. Johansson’s (2001) view suggests that economy-related strategies in marketing are critical in establishing long-term goals. Furthermore, the company has also endeavored to be sensitive to the economic development in Latin America which aside from being a major market also is important its supply chain. Latin American has been able to increase its supply power in world markets and have required higher prices for their goods. Furthermore, there has been significantly more mobility in capital and trade liberalization from the 1970’s (Bulmer-Thomas, 2006). This creates a challenge for the company to be more cost-effective and as well as market-oriented in its approach. The trend has been successful in controlling inflation rates and allowed significantly greater role of the middle class which, to Goya’s advantage, represents a significant bulk of its market (Hoffman, 2003). Competitive Forces Just as importantly, if not more urgent, is the increasing competitiveness in the market. As mentioned, the size of the market is attracting significant interest from new players. New players range from mainstream food manufacturing markets as well as direct competitors (Demetrakakes, 2003). Though the company has been able to maintain its position, it estimates the competition in the market to significantly increase. Goya sees the need to deal with the entry of larger competitors with more extensive distribution channels and prominent brands (Goya, 2007a). The entry of new competitors also can induce a price war which can reduce the company’s profit margin and limit Goya as a niche brand instead of its objective to be a mainstream one. Johansson (2001) points out that price wars have the potential of sifting advantage from producers and raise quality standards. Though this can create vitality in the market, if competitors saturate the market, particularly when the market does not expand proportionally, then operational costs can not be justified. Waltuck (2005) raises concerns regarding fragmentation of the market amongst the competitors which can make logistics of assessing and accessing markets more challenging. To respond to these concerns, Goya maintains communication and relations with its market, following closely market preference, demographics, and psychographics as well as migration movements. This also reinforces the brand’s image as part of the Latino culture and identity. The company’s belief is that â€Å"Latinos like buying things they consider their own, that are authentic† (Hoffman, 2003, p. 35). Thus the company does not only rely strictly on the actual quality of the product but is also able to maintain the perceived quality of the product which lies more beyond the control of the company. Another element that can be enhanced by the strategy is the reputation of the company, a confidence which extends beyond the sales performance Goya Maksimovic and Sheridan (2005) point out that this has also been increasingly important factors in the financial reputations of companies. In the case of Goya, one of the reason’s for its cooperate success is its hold on the market, a fact that creates significance confidence for investors as indicated by the company’s rank among Forbes Top 500 companies in the United States (Riell, 2007). Conversely, this rating also reinforces Goya as a premiere brand and creates pride among the Latino community. Socio-Cultural Forces Considering that the company’s imaging is anchored on its being a Latino product, socio-cultural factors can be seen as the most important consideration of the company’s marketing strategy. According to Johansson’s (2001) assessment of Latin markets, there is great attachment for family and cultural heritage that emphasizes religion, culture, community and tradition. Social and family gatherings are focused on reinforcing these elements and since these events involve the preparation of traditional cuisine, the demand for food ingredients is just as important. Goya’s view on Latin culture considers the development of identity, social skills and value systems and unique attributes associated within subgroups due to geography, ethnicity or nationality. A survey of Goya’s products shows that they are labeled using traditional names of products , emphasis on the traditional designs and effort is made to develop product variations to accommodate tastes (Demetrakakes, 2003). For example, salsa products are offered in several levels of spice intensity or chili combinations (Goya, 2007b). This accommodates for variances in preparation of products based on traditions within the Latino community. In addition to responding to indelible facets of the market, the company has also become adept in responding to socio-cultural changes within the community. Bulmer-Thomas (2006) points out that Latin American markets are changing significantly because of liberalization and diversification of its markets to which he attributes changes on social dynamics. One of the most significant changes is in the role of women. Traditional Hispanic households have been characterized as the primary homemakers thus most of the company’s products targeted women specifically in contrast to today, products are designed to be more non-gender specific. Another indication of the company’s sensitivity to the socio-cultural background of its clientele is in its efforts to educate non-Latino customers to Latin culture. Most products have anecdotal information regarding the origin, manner of preparation or cultural references of the product. This may also be an effort to reinforce Latin culture amongst on-traditional or mixed-heritage families. In recognition of the lifestyle and economic status of its market, Goya has also developed instant or quick preparation products. This was a response to surveys that most Latino families have shifted to become dual families as well as an effort to cater to casual dining markets. Another response to changes in lifestyle is the development of frozen and low-sodium products. The former has also contributed to extend the shelf of prepared and ready-to-eat products while the latter is a response to medical studies of the Latino population that indicated heart and kidney diseases as major health risks (Johansson, 2001). This type of valuation is again creates sensitivity and insight to their target market which reinforce the brand to the market (Johnson, 2006). Furthermore, this creates social significance to the products since they become intimately associated not only to the idea of Latino food but to Latino identity as a whole. Understanding Subgroups within the Latino Community Latino is considered an umbrella to encompass a number of nationalities characterized by Latin American or Spanish ancestry. According to Hoffman (2003, pp. 22-24) there is a need to understand various subgroups within the community to respond to nationalistic, ethnic or cultural identifications. The study of Bulmer-Thomas (2006) reinforces this idea by showing that individual national, ethnic and cultural experience has a direct relationship with market perceptions and performance. He uses the example of Brazil and Mexico as an example: European products are perceived better than American products in the former while the reverse is what is prevalent in Mexican markets. Thus, Goya can expect to contend with similar products from European products in Brazil and American brands in Mexico. Johnson (2006) points out that generalized identity constructions like in the use of the term â€Å"Latino† to refer to a segment of the population always creates conflicts with the recognition of multiculturalism. This can fail to recognize social dynamics within the community that have developed from historical conflicts or social positions. Aside from the obvious differences in nationality, social stratification is also prevalent as seen in social labels used to refer to ethnic minorities or those of mixed heritage still persist. In not recognizing these groups, there can only be limited recognition of the diversity within the Latino population. This also precludes the company from truly promoting Latino culture which it has claimed as one its social goals. Keeping diversity within the Latino community will also allow Goya to develop more products and diversify its markets. At the same time, this can be a means of maintaining cultural identity since homogeneity will only make the market more similar to mainstream psychographics. Though the company is targeting mainstream markets, maintain a traditional Latino market is also important because the community showcases Latino traditions, particularly cuisines. Challenges of Market Diversification Goya considers its foray to non-Latino markets. One of the major challenges for the company is to develop a collaborated marketing programs for both Latino and non-Latino markets. There may be a need to accommodate non-Latino market’s lack of familiarity or experience with the Latino traditions. Another constraint that has to be considered is the logistic challenges of supplying the demand of non-Latino markets. This will include not only supplying shelves with the actual products but also changing packaging, variants and modes of products. Other social factors also become an issue: since Latino communities are predominantly Catholics or Christians, there has been no significant need to develop halal-approved products, foods approved for Muslim consumption. So far, adaptation has been of non-Latino markets developing preference for Latino products. Despite this trend which is in the advantage of Goya, a Johansson (2001) point out the need to facilitate the behaviors since adaptations has its limitations. Accessing new markets also exposes Goya to greater competition. This can also be made difficult by the lack of experience in these markets or insights. Goya has stated that it rely its marketing strategies on close monitoring of social trends in its markets however, considering the scale of non-Latino markets, this will be prove more challenging to develop insights on buying preferences to demographic or psychographic characteristics (Besanko, 2005). Hoffman points out that overall globalization trends in societies and markets are highlighting the need for competitive advantage and at the same social sensitivity. There is no denying that has shown its cultural sensitivity, the next challenge is to develop sensitivity to non-Latino markets. Riell (2007) suggests further cross-over market testing of products. Similarly, Waltuck (2005) suggest the Goya should use both market and product strategies. Market strategies will accommodate for the dissimilarities with its traditional markets while product strategies will be a means to determine what products are already marketable to non-Latino markets. Conclusion The Goya Company has become an icon not only culturally but also commercially. In recent years, Latino communities worldwide have become more prominent in consumer markets because of rapid growth in Latin American countries as well as increasing social significance of Latino migrants particularly in the North America. Furthermore, interests in its traditions and culture have created new market opportunities of Latino products in mainstream markets. Interest in these products have proven themselves more than a fad but many non-Latino consumers have indicated their preference for Latino cuisine and food products. As public image and social responsibility become more of an issue for companies, Goya’s approach to business has lent them not only market presence but also social relevance. Its current objective to access mainstream markets is not surprising considering the current internet of non-Latino consumers of its products. However, there is also need to realize and respond to the demands of doing so will have for the company. Together with the change is scale, there is also a need to develop new competencies to maintain the strategic advantages that has established its success in Latino markets. In conclusion, Goya should assess the environmental forces of its new markets, particularly those that influence the economics, competitiveness and socio-cultural characteristics of the market. In doing so, the company will be able to prove that there is not only an existing demand for its products but that potential for them is not limited to culture, race, ethnicity or nationality.