Running head: PRODUCT LAUNCH

Kudler Fine Foods Product Launch Plan

Tara Appling-Crisp, Sada Ashcraft, Molly Cook, Kimberly Ferketich,
Denise Hoyt, Van Marsalis, and Dion Sanders
University of Phoenix
MKT/571
March 7, 2011
Susan Rusnak

Running head: PRODUCT LAUNCH

Kudler Fine Foods Product Launch Plan

Kudler Fine Foods provides gourmet fare to the San Diego area of California. After
realizing continuous revenue increases since 1998, expansion efforts to Mexico and Spain
include a new product line offering of gourmet flavored vinegars. Initial market research and
competition research provided information that these areas were ignored in the gourmet food
market. A wide range of market research determines success or failure when entering an
unexplored market with a new product. For example, choosing the appropriate target market and
communications mix when entering the gourmet market of these countries is vital to success.
Pricing of the new products requires additional research regarding distribution and product
launch expenses as detailed in the financial budget and unit forecasts. Finally, public relations
efforts before the store grand openings require planning and implementation of the appropriate
budget and event efforts. Continuing all of these efforts during the life span of the company
provides Kudler Fine Foods a leading position in the gourmet food industry of Mexico and
Spain.
Product Description
Kudler Fine Foods offers a variety of gourmet food products within the meat, cheese,
produce, and bakery categories. An area that requires development specifically in the expansion
efforts of the Mexican and Spanish markets is offering other gourmet ingredients used in cooking
and serving these food items. Kudlers marketing overview indicates the use of gourmet
websites and magazines to create ideas for new products. Research on igourmet.com (2011)
revealed that flavored vinegars offer a variety of options beneficial for Kudler. Offering flavored
vinegars to create new tastes and further authenticate the food provides Kudler with additional

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gourmet options, such as fruit vinegars, tarragon white wine vinegar, or Bavarian beer vinegar.
Each flavor is intended for different meat, produce, or cheese uses. For example, pomegranate
champagne vinegar provides a new depth to soups and stews. Likewise, the framboise fruit
vinegar pairs well with duck or bleu cheese. A new offering out of Brazil includes acai berry
vinegar, which provides additional nutrients to any salad.
Market Needs
After extensive marketing research, Kudler came to the conclusion that because the
upper-middle and middle-class people in Mexico and Spain are growing, their tastes and their
pursuit of higher quality products would cause them to desire gourmet foods. Gourmet foods are
growing in popularity as a hobby as well as becoming another method to display a higher place
in society for many people. The new line of flavored vinegars would meet the customers needs
and desires. Kudler needs to maintain a thorough knowledge of all their products they have
available, including the new line of flavored vinegars, so they can educate their customers with
the different uses of these products. They also need to provide customers good service giving
them a high impression of the companys place in the gourmet food market. Therefore, the
products carried by Kudler represent a solid demand in the new market and excellent opportunity
for growth. Because there are a minimal amount of competitors, Kudler will help meet the
growing demands for gourmet foods. Kudler needs to build a sustainable business with a loyal
customer base in the market by establishing a high level of service. Kudlers market needs
analysis enables the company to meet current needs and plan for future demands (Primary
Intelligence, 2011).

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Market Growth and Potential

Limited competition and various economic factors combine to provide a great deal of
market growth opportunity for Kudler Fine Foods in both Spain and Mexico. The exclusivity
aspect of the Kudlers gourmet products will help the reality of market growth come to fruition.
The company will enter the market with a clear and concise plan and the budget to grow the
product popularity and increase demand in both regions.
Mexicos economy is facilitating the surge of upper-middle-class consumers (Wurst,
2004). As well, Spains economy is positively recovering from the events of the past few years
of economic downturn (Shasha, 2010). Both factors are encouraging to a company selling
gourmet products, such as Kudler Fine Foods. The competition of each country is extremely
minimal. To maximize the growth opportunity, the approach taken in the initial product launch
and market entry stages is crucial to the companys success in these new markets. Adherence to
the marketing and product launch plan is a vital component of the approach. The opportunity is
identifiable in terms of the economic conditions of both countries and few competitors.
However, Kudlers ability not only to identify, but also reach their target market will be the
determining factor for the companys success in their initial market entry. As well, this process
will have profound effects on ensuring a continued presence and success in both markets.
SWOT Analysis
Strengths
1. Easy supervision of all activities because of the
small size of the company
2. A wide variety of gourmet foods and flavored
vinegars
3. Minimal number of specialty food stores in

Weaknesses

1. Purchasing products through wholesalers

rather than making on location will cause
higher costs
2. Compliance with rules and regulations of
Spain and Mexico requires vigilance
3. Expansion requires capital from outside

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Mexico and Spain offering flavored vinegars

similar to Kudlers

sources

4. Locations in Mexico City and Madrid allow

economic targets of the middle and upper-middle
classes
5. Kudler provides recipes and in-store
demonstrations
6. User-friendly website in Spain with seasonal
products, specials, user to user communication,
recipes, and tips
7. High quality customer service with friendly and
helpful interactions with customers
Opportunities

Threats

1. Pursuits of gourmet food increases as

the middle and upper-middle classes grow
in Spain and Mexico

1. Poor economic conditions create the

need to purchase necessities rather than
specialty products

2. Profits increase as customers purchase

other gourmet products in addition to the
flavored vinegars

2. Increase in competition created through

the popularity of the new product

3. Government regulations could affect

consumer spending

3. Possible further expansion to other

international markets

4. Increasing customer awareness of

products offered through street fairs and
farmers markets

Competition

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Domestic Competition
Competition in Mexico is minimal because the majority of local stores in Mexico are
small local convenience stores (Tours in Mexico, n.d.). Mexicana and Gigante are large stores in
Mexico that offer more costly products brought in from the United States. These stores are direct
competitors as they offer gourmet products with high prices because of the value. Most
manufacturers in Mexico are not direct competitors as the manufacturers do not offer the same
flavored vinegars as Kudler Fine Foods. The manufacturers are indirect competitors as they do
offer vinegar products, and the products are sold locally with different flavored vinegar products
not offered by Kudler. The company also competes with online gourmet food sales as the
competitors can ship product to Mexico and offer multiple vinegar products.
International Competition
Kudler has the opportunity to initiate a product launch to sell gourmet flavored vinegar to
consumers and businesses in Spain with many lurking competitors. Spain markets sell with
different venues for food shopping such as central markets, hypermarkets, and open air markets
(Think Spain, 2007). The central markets do not offer extensive gourmet products. However,
the hypermarkets do offer gourmet products and are known to frequently import. In addition to
the central markets and the hypermarkets, Kudler will compete in the open air markets selling
products in which gourmet food seems to be a rarity.

Marketing Strategy and Objectives

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Because Kudler Fine Foods has realized success and growth in the California locations,
expansion and offering new products becomes the logical next step for the company. After
significant research, Mexico and Spain are revealed as prime locations for the new stores.
Additionally, a new line of flavored vinegars provides a variety of options for implementation
into the Spanish and Mexican cuisines. The identification of the target audience as the middle
and upper-middle classes of Mexico City and Madrid provides a clear direction for the marketing
strategy and objectives necessary for success. The objectives for the marketing plan are to
increase revenues, decrease costs, and most important provide the customer with quality products
to ensure return to the store. Implementing a loyalty program or frequent shopper program such
as the traditional punch card concept provides customers with incentives and strengthens
customer retention. In-store demonstrations and the provision of product ideas and recipes gives
the customer an exciting experience within the store that also prompts frequent returns and
further increases revenues. A third objective for Kudler involves reducing costs, which is
accomplished through the discovery of flavored vinegar suppliers close to both of the new
locations thereby avoiding high shipping and import costs.
Pursuing a holistic marketing strategy serves a dual purpose because it places the focus
on the value of the customer while increasing revenues for the company (Kotler & Keller, 2007).
Although Internet usage is minimal in Mexico, providing Spanish customers with a blogging
option on the Kudler website allows customer interaction with the store and other customers.
Additionally, using a recipe provided by a customer during in-store demonstrations or in a
monthly newsletter in the store shows the customer the company values the culture as well as the
ideas of the customers. Managing the effectiveness of the marketing plan for each of the
markets, in addition to managing the budget, requires constant measuring of the results of each

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tool implemented into the communications and marketing plan. The survey covers pricing,
customer service, store atmosphere, product selection and quality as well as employee
knowledge of the products. Duplicating the online survey in the monthly newsletter provides
customer without Internet access a method of personal communication. Tracking the results in
the computer ensures accuracy and monitoring for any required changes to meet customer needs.
Coupon incentives for the customer once the survey is completed further increases the results
and customer value.
Targeting
With the steady growth of the gourmet food industry, Kudler Fine Foods must focus on
strategic markets as the expansion endeavor develops in Mexico and Spain, and also promoting a
new line of flavored vinegars. Although the unemployment rate of Spain was 20% as of the first
quarter of 2010 because of the global economic crisis, the number is slowly decreasing as global
economic conditions improve with many moving from rural areas to the larger cities creating an
increase in the middle classes (U.S. Department of State, 2010). The same migration is true of
Mexico. Because the middle and upper-middle classes are on the rise and the primary purchasers
of gourmet fare, Mexico City and Madrid are important targets to reach with the message
conveyed through Kudlers marketing strategies. The middle and upper-middle classes are
people who will sample flavored vinegars with the gourmet styles of cooking growing in interest
for citizens and travelers alike. Capitalizing on the growing number of upper-middle and
middle-class consumers and travelers within Mexico City, Mexico, and Madrid, the new Spain
venture allows Kudler to gain a competitive edge in the gourmet food industry.
Product Positioning

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Kudler Fine Foods goal in positioning the flavored vinegars within the market is to find
media channels that create a sense of uniqueness compared to the competitors. This includes the
logo that defines and introduces the product on ads that inform and create an image that isolates
Kudler from the very competitive vinegar segment. Kudler also wants to send the promotional
marketing message to their select audience with the least amount of time and cost.
Kudler wants to position the flavored vinegars to represent the company within the home
location of Mexico and the international new venture in Spain. Both areas are competitive and
Kudler Fine Foods has to find ways to rise above the competition. The flavored vinegars offer a
gourmet cooking experience where they taste and smell natural herbs and colors pleasing to any
pallet. The vinegars cannot be compared to any others on the market and stand out alone with
the variety that Kudler offers. The products are accommodating to the different Mexico and
Spanish markets so that the middle and upper class cooks can enjoy trying many flavors.
Mexico uses a large amount of chilis in many of their dishes and so Kudler has created the chili
flavored vinegar that targets family recipes.
Kudler Fine Foods brings the flavored vinegars to Spain as a new-to-the-world product in
the areas of the different flavors and high-end gourmet tastes. Spain is known to enjoy vinegar
with many of their dishes daily. The variety of spices and herbs used in the fruit, Bavarian, and
other flavored vinegars will bring uniqueness and a specialty gourmet option to Spain.
Distribution Strategy
Supply chain efficiency is critical to the success of this product line expansion. Kudler
will purchase the flavored vinegars for its Mexico stores through Wholesale Gourmet, a supplier
based in Houston, Texas. Wholesale Gourmet offers a variety of products from different

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10

vendors. The buyer from each retail store orders and pays through the website with the shipment
sent directly from the vendor chosen in the ordering process. With Free on Board (FOB)
shipping terms, Kudler owns the product purchased as soon as the shipper takes possession
requiring close involvement in monitoring the quality of packaging and transportation
arrangements to minimize added cost of processing claims on damaged goods (Sell Gourmet,
2011). Distribution to domestic customers in Mexico takes place primarily in the existing store
through strategic placement and point of sale demonstrations in addition to street fair vending.
The new location in Madrid, Sprain requires the use of another supplier because
Wholesale Gourmet only ships on the North American continent and a few surrounding islands.
Therefore, Kudler must purchase the flavored vinegars from Cotswold Fayre, a distributor in the
United Kingdom, to supply its store in Spain. Cotswold Fayre requires the buyer to purchase a
full pallet of a product at one time for international shipment. By ordering an entire truckload of
product, the unit shipping cost is minimized as needed to increase revenues and aid in the
reduction of cost of goods sold (Cotswold Fayre, 2004). The new store location in Spain
provides customers an avenue to purchase Kudlers products including the new line of flavored
vinegars through point of sale demonstrations, symbiotic placement, an interactive website that
includes newsletters and blogs, and distribution at street fairs and farmers markets.

Marketing Communications and Public Relations

A powerful marketing communication strategy should serve to make your business stand
out from the crowd (Swearingen, 2010, p.1). A variety of marketing efforts accomplishes that
goal. Kudler Fine Foods will use radio and television advertising, fliers and mailers, and

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11

purchase incentives to identify the new product line and benefits of the flavored vinegars in
Mexico. Point of purchase displays, demonstrations, and in-store samples build brand awareness
and quality in both locations. Because of low Internet usage per capita in Mexico, advertising of
that capacity is best served in Spain in addition to infiltrating Spanish gourmet food stores and
restaurants with mailers. Street vendors and farmers markets specific to Spain, provide a
personal method of marketing that permits customer feedback. Planning for this event provides
options for further public relations techniques.
Public relations is the attempt to influence the public's perception of a product, service,
or idea by working through public channels such as the mediaThe advantage of using public
relations is that it is thought to produce a more convincing message than advertising (Marketing
Methods, 2008, p. 1). Public relations functions provide another aspect of communication
important to Kudlers success. These tactics, when used as part of a communications strategy,
builds the new line of flavored vinegars by issuing periodic press releases as well as organizing
special events to generate positive media coverage. Kudler also has a responsibility to maintain
an ethically sound image while implementing its domestic and foreign communications strategy.
Developing an effective and attractive communication with the target markets provides Kudler
with a strategic image both valuable and profitable.

Pricing
Kudler Fine Foods is offering flavored vinegar products in Mexico and Spain and must
create a price point that will cover the product launch costs as well as shipping costs to ensure an
increase in revenue and a more profitable company. Kudler determines the price by using the

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12

six-step process for pricing policy that includes understanding the objective, demand, costs,
competition, pricing method, and the final price of the flavored vinegar product (Kotler & Keller,
2006). Kudlers objective is to price the product at an amount that will allow an increase in
revenue. The company determines the demand of the product by the market need of gourmet
flavored vinegar products in Spain and Mexico.
The last four parts of the six-step process begin with understanding costs, competition
pricing, the pricing method, and the final price. Kudler must determine the cost prior to setting
the price to ensure profitability. In relation to Kudlers budget and projected cash flow
statement, the purchase price of $9 per unit and the total labor determine the cost of goods sold.
Additional product launch costs are marketing, development, and allocated overhead costs.
Competitor prices start around $4.95 and increase to $30, depending on the rarity of the flavored
vinegars, estimating without the inclusion of shipping costs (Amazon.com, 2010). Using the
keystone and psychological pricing methods, Kudler can price the flavored vinegar products at
$14.99 per bottle, which is almost twice the purchase cost, competing in the market while
achieving a reasonable profit.

Market Research
Kotler and Keller define market research as the systematic design, collection, analysis,
and reporting of data and findings relevant to a specific marketing situation facing the company
(2007, p. 42). Because Kudler Fine Foods is entering new markets in Mexico and Spain as well
as introducing a new line of flavored vinegars to an already extensive product list, a wide range

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13

of research is required to ensure a successful product launch and introduction into the gourmet
food markets of the new locations. Initially, research required the search of a variety of gourmet
food stores and online gourmet providers to find a product that Kudler lacked and could easily
implement into the stores. Flavored vinegars that cannot be found in traditional grocery stores
became the best choice because of the range of uses for a variety of flavors. Advertising the
flavored vinegars also serves a dual purpose because the usage and recipe ideas provided prompt
the customer to purchase other items in the store needed for the recipe.
Additional market research required the discovery of information about the economic
conditions of the respective countries to determine a target audience. Competition and pricing
information was obtained through online research and conversations with an expert in the
gourmet food industry. This information allowed Kudler to determine a price lower than the
average competitor while still covering the necessary costs and allowing an increase in revenues.
Additionally, Wholesale Gourmet was chosen as the supplier for the Mexico location because of
a limited supply of companies willing to ship to the country. Internet research also located a
supplier in the United Kingdom for the Spain location. All of the research provided ample
information for a seamless budget detailing product launch expenses as well as unit forecasts for
three years with estimated sales increases for each year.
Financial Budget with Three-Year Unit Forecasts
Appendix A and B reveal the financial information for Kudler Fine Foods including
product launch expenses, unit forecasts for three years, capital budget, expected sales with
determined per unit pricing, and a projected cash flow statement.
Conclusion

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14

Kudlers success in San Diego since 1998 contributes to the companys decision in
expanding to Mexico and Spain to sell gourmet flavored vinegar products. The companys
marketing plan assists Kudler in reinforcing the decision for the expansion and provides a floor
plan in regard to the description of the product, market needs, market growth, market potential,
and a SWOT analysis. In addition the plan provides research in regard to competition, marketing
strategy and objectives, target markets, product positioning, distribution strategy, marketing
communications, public relations, price, market research, forecasting, and product launch costs.
The companys research in each area determines the success or failure in the new venture, and in
Kudlers case the extensive marketing plan provides a path for success.

References
Agroles USA, Inc. (n.d.). Catalan gourmet. Retrieved from http://www.catalangourmet.com/
Bass, F. (January 1969). A new product growth for model consumer durables. Management
Science, 16(5).
Burns, B. (2008). Marketing Methods. In, Marketing Methods -- Research Starters Business (p.
1). Great Neck Publishing. Retrieved from EBSCOhost.

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15

Corrigan, D. (2010). Spain travel. About.com. Retrieved from

http://gospain.about.com/od/beforeyougo/qt/euro_converter.htm
Cotswold Fayre (2204). Website accessed March 6, 2011 at www.cotswold-fayre.co.uk.
igourmet (2011). igourmet.com. Retrieved on February 2, 2011 from
http://www.igourmet.com
Kotler, Philip and Keller, Kevin Lane. (2007). A Framework for Marketing Management (3rd
ed.). Retrieved from https://ecampus.phoenix.edu/classroom/ic/classroom.aspx
Primary Intelligence. (2011). Primary intelligence: the intelligent approach to business
success. Retrieved from http://www.primary-intel.com/flagship-services/market-needsanalysis
Sell Gourmet, LLC (2011). Wholesale Gourmet. Website accessed March 5, 2011 at
http://wholesalegourmet.net.
Shasha, D. (2010). 2010: Spains Economy Rides the Storm. Retrieved from
http://news.xinhuanet.com/english2010/business/2010-12/28/c_13666885.htm
Swearingen, C. (2010). SmallBiz Marketing Tips. Small Business Marketing Tips. Retrieved
from http://www.small-biz-marketing-tips.com/marketing-communication-strategy.html
The Money Converter. (2010. Convert US Dollar to Mexican Peso | USD to MXN . Retrieved
from http://themoneyconverter.com/USD/MXN.aspx
Think Spain. (2007). Spains glorious markets: the cathedrals of the senses. Retrieved from

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16

http://www.thinkspain.com/news-spain/14135/spains-glorious-markets-the-cathedrals-ofthe-senses
Tours in Mexico. (n.d.). Grocery shopping in Mexico. Retrieved from
http://www.toursinmexico.com/general/groceries.htm
Trading Economics. (2010a). Cost to import (US dollar per container) in Spain . Retrieved from
http://www.tradingeconomics.com/spain/cost-to-import-us-dollar-per-container-wbdata.html
Trading Economics (2010b). Mexico GDP growth rate. Retrieved March 2, 2011 from
www.tradingeconomics.com.
Trading Economics (2010c). Spain GDP growth rate. Retrieved March 2, 2011 from
www.tradingeconomics.com.
U.S. Department of State. (2010). Background Notes. Retrieved from
http://www.state.gov/r/pa/ei/bgn/index.htm
Wurst, E. (2004). Mexican Middle Class Rising. Crossing Borders. Retrieved from
http://cronkitezine.asu.edu/Mexico/middleclass.html

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Appendix A: Financial Budget Information

Projected Cash Flow Statement for Product Launch in Mexico and Spain
Number of
Units
(forecasted in
the first year)
Sales Revenue

Price

Total

Mexico

51615

14.99

$773,708.85

Spain

25861

14.99

$387,656.39

COG from Product

Avg Cost of Labor Launch Exp Budget
Cost of Goods Sold

Mexico

$45,086.54

$464,535.00

$509,621.54

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Spain

Gross Margin

18

$22,543.27

$264,087.32

Spain

-$45,156.88
Number of units

Mexico

$0.50

51615

$25,807.50

Spain

$0.50

25861

$12,930.50

Cost per unit

Marketing Costs

Number of units

Mexico

$0.25

51615

$12,903.75

Spain

$0.25

25861

$6,465.25

Cost per unit

Allocated Overhead

Gross Contribution

$432,813.27

Mexico

Cost per unit

Development Costs

$410,270.00

Number of units

Mexico

$0.10

51615

$5,161.50

Spain

$0.10

25861

$2,586.10

Mexico

$220,214.57

Spain

-$67,138.73

Number of Units forecasted

in the first year
Mexico

Spain

1200

600

Q1

12068

6040

Q2

18206

9121

Q3

20141

10100

Q4

51615

25861

Total

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430.125

215.5083

Number of Pallets @ 120 per pallet

19

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20

Product Launch Expense Budget

Cost Of Good Sold
Mexico

Item

Purchase
Price per
Unit

Assorted
Flavored
Vinegars

$9.00

Amount

Shipping
Cost

Import Costs per Number of

Container
Containers

51,615 $ 2,500

$0.00

Total Price

$464,535

Spain

Item

Purchase
Price per
Unit (in
cases)

Assorted
Flavored
Vinegars

$9.00

Note:

Amount

Shipping
Cost per Number Import Costs per Number of
pallet
of pallets
Container
Containers

25861 $

820

215

$1,221.00

Total Price

Purchase Price is at $9/bottle

12 bottles per case
120 cases per pallet

COST TO IMPORT (US DOLLAR PER CONTAINER) IN SPAIN

http://www.tradingeconomics.com/spain/cost-to-import-us-dollar-per-container-wb-data.html

Currency Conversion
http://gospain.about.com/od/beforeyougo/qt/euro_converter.htm

$1=0.82 euros

http://themoneyconverter.com/USD/MXN.aspx

$1=12.0074 Peso

$410,270

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Shipping Costs
http://www.cotswold-fayre.co.uk/shipping.php
Zone 4 1000 euros converted to dollars in budget

Pallet and Case per Bottle measurements

http://www.catalangourmet.com/

21

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22
Capital Budget

Kudler Fine Foods

Information Technology - FY04 Capital Budget
Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Design &
Development of
B to C Web Site

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 45,000

Replacement of
Finance &
Accounting
System

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 2,500

$ 22,500

CRM System

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 5,000

$ 45,000

POS System

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 3,600

$ 32,400

Purchasing
System

Note: The capital budget amounts may be adjusted by the business & budget committees based
upon IS recommendations and justifications. The capital budget has also been "straight lined" until
such time as more definite information is available.

Appendix B: 3 Year Unit Forecast

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Assumptions:
1) Roughly follows Bass Model shape (Bass, 1969).
2) GDP growth per quarter for Mexico follows average rate of 0.57% (Trading Economics,
2010b).
3) GDP growth per quarter for Spain follows average rate of 0.67% (Trading Economics,
2010c).