De La Salle – College of Saint Benilde

2544 Taft Avenue, Manila

First Term, SY 2016 - 2017

Figaro to Frankfurt

In partial fulfillment
of the course
Export Marketing (EXPOMAR)

Submitted by:
Bonus, Lorenzo
Go, Aldrich
Ortiz, Jonemina
Piol, Kimberly

Section TE001

Submitted to:
Ms. Judith Claridades
December 6, 2016
 FIGARO TO FRANKFURT

Background
Figaro
● Keeping the European Concept
● Started as a company at 1994
● First Kiosk at Makati Mall of the Ayala Center
● First official store as a company located at Manila

Market Segmentation
Geographic: Metro Cities, Urban
Demographic: 16-70 | Single | Married | All Genders | With budget for
leisure - EUR 10 | Corporate Workers | College
Students | Working Class – Upper Class
Psychographic: Coffee lovers | Needs caffeine boost | Enjoys bonding in
a café | Values time with friends and family | Values
alone time
Behavioral: Loyalty to brands | Frequent coffee drinkers
Market Positioning

Target Market Summary

Frankfurt's ranked as the 9th busiest city in the world as of 2014, and continuing to
remain their busy status as of the moment. Also, the entire country of Germany is one of the
highest consumers of coffee in the world -- 5.2kg per capita. The majority of Germans drinks
coffee because it is an energizing drink and because it is tasty. 73% on average, drinks at least
one cup of coffee per day. The percentage rises to 87% for the population aged over 46 years
while drops to 59% for young people between 18 and 35 years. Frankfurt currently has a
population of 731,095 as of 2015.
In today's world, the average German consumes about 1.43 cups per day. However,
consuming a total 445,197,000kg of coffee per year.
Age structure:
0-14 years: 13% (male 48,478/female 45,966)
15-24 years: 10.6% (male 39,309/female 37,697)
25-54 years: 41.7% (male 154,047/female 149,985)
55-64 years: 13.6% (male 49,169/female 50,167)
65 years and over: 21.1% (male 67,217/female 86,933) (2014 est.)
PESTLE
● Political
Taxable income
The Federal Ministry of Finance and the local upper tax authorities can issue
administrative decrees for guidance on certain aspect of the tax laws.
The tax authorities at the federal and state levels are in general responsible for collecting
tax and enforcing the tax law.

Taxes
Corporate income tax rate: 15%
Branch tax rate: 15%
Capital gains tax rate: 15%
Solidarity surcharge: 5.5% of corporate income tax
Trade tax: 14%-19% (typical rate in main cities)
​Filing and Payment
Corporate taxes are assessed on an annual basis but advance payment is
required in quarterly installments:
- 10​th​ of March
- 10​th​ of June
- 10​th​ of September
- 10​th​ of December
Municipal taxes are due on:
- 15​th​ of February
- 15​th​ of May
- 15​th​ of August
- 15​th​ of November

Final Tax Returns must be filed by 31​st of May of the following year. If a
professional tax advisor prepares the return, the due date is automatically extended to
31​st of December of the following year.; however, the tax authorities may request that a
taxpayer file the tax return before 31​st of December. In case of no or late filing, the tax
authorities may impose a fine up to 10% of the tax assessed, subject to a maximum fine
of EUR 25,000.
Employers are responsible for wage tax on remuneration paid to their
employees. The wage tax return must be filed on a monthly basis for all employees if the
wage tax total exceeded EUR 4,000 in the previous year, and on a quarterly basis if it
exceeded EUR 1,080 but was not more than EUR 4,000. Annual filing is sufficient if the
wage tax total did not exceed EUR 1,080 in the prior year.
The rate of income tax in Germany ranges from 0% to 45%.
EUR %
8,652 0
8,653-53,665 14
53,666-254,446 42
254,447 & over 45

Fiscal Policy
Germany’s federal government posted a 1.2 percent of GDP fiscal surplus in the
first half of 2016. The IMF was forecasting a federal surplus of 0.3 percent (and a
general government deficit of 0.1 percent of GDP.
Germany’s ongoing fiscal surplus contributes to Germany’s massive current
account surplus, and the large and growing external surplus of the Eurozone (the
Eurozone’s surplus reached €350 billion in the last four quarters of data, which now
includes q2). The external surplus effectively exports Europe’s demand shortfall to the
rest of the world, and puts downward pressure on global interest rates. Cue my usual
links to papers warning about the risk of exporting secular stagnation.

​Trade Tariff

Goods imported from non-EU states are subject to an import turnover tax
(Einfuhrumsatzsteuer). The import turnover tax rate equals the VAT (value-added tax)
rates of 19 percent levied on domestic products (or 7 percent for some product
categories), and has to be paid to the customs authority. The assessment base for the
import turnover tax is the so-called customs value.
The import turnover tax on goods imported from non-EU states can be deducted
as a so-called input tax (Vorsteuer). As a prerequisite, the company must have the
necessary import documents with customs proof of payment (import declaration). It is
important to collect and present all invoices as originals in order to deduct any VAT
 charges from one's own tax liability or to get reimbursed by the German Ministry of
Finance, if eligible.

● Economical
Inflation Rate

Inflation Rate Forecast

Date: Rate %:
Q4/2016 0.8
Q1/2017 0.7
Q2/2017 0.9
Q3/2017 1.1
Q1/2020 2.5

Interest Rate:
The benchmark interest rate in Germany was last recorded at 0 percent. Interest
Rate in Germany averaged 2.17 percent from 1998 to 2016, reaching an all-time high of
4.75% in October, 2000 and a record low of 0.00% in March, 2016.
 Foreign Exchange Rate (as of December 6, 2016)
1 EUR = 53.20 PHP

GDP Growth Rate

GDP Growth Rate in Germany is expected to be 0.30 percent by the end of this
quarter, according to Trading Economics global macro models and analysts’
expectations. Looking forward, we estimate GDP Growth Rate in Germany to stand at
0.50 in 12 months’ time. In the long-term, the German GDP Growth Rate is projected to
trend around 1.00 percent in 2020, according to our econometric models.

● Social
Cultural Trends/Habits (related to the topic)
● Germans love rich, healthy food
● Germans love bonding with coffee
● Coffee during breakfast and snack time
● Coffee partnered with cake/pastries
● Germans don’t like eating with fingers, they always use utensils
● Food is a big part of their culture
● Germans frequently share information about the government/news.
● Love festivities
● Love socializing with friends and families

● Technological
POS – Point of Sale will be required to have a systematized record of inventories and
flow of sales; this way, any stealing or loss of a raw material will be avoided.
 LED Alert Systems – This system helps the staff in the kitchen to serve the orders on
time.

● Legal
Labor Law
In July 2014, the country began legislating to introduce a federally mandated minimum
wage law, the ​Gesetz zur Regelung eines allgemeinen Mindestlohns (Mindestlohngesetz
- MiLoG) (unofficial translation: "Act Regulating a General Minimum Wage (Minimum
Wage Act)"), which came into effect on 1 January 2015. The minimum wage is set at
€8.50 per hour.

Consumer Law
CHARTER OF FUNDAMENTAL RIGHTS OF THE EUROPEAN UNION (2010/C 83/02)
Summary:
European legislation guarantees consumers:
● fair treatment;
● products which meet acceptable standards;
● a right of redress if something goes wrong.
● EU legislation in other areas also has to take consumer protection into account.

Safety Standards
*Sample from “Official Food Control in Germany”
3.1.
Principles of food control Mentioned above the German official food control does not
differ much from the EU principles:
Objective
● Safeguarding health
● Safeguarding consumer interests (protection against deception and fraud
● Assurance of food quality and honest trading
Type of control
● Routine (random) checks
● On suspicion
● In all phases of production, manufacturing, import, treatment, storage,
transportation and sale

Method of implementation
● Inspection of manufacturing premises
● Sample-taking and analysis of samples
● Inspection of written documents and data media
 ● Inspection of the company’s own control systems, including measuring
instruments

● Environmental
Geographical Location
Frankfurt, Germany

Climate and weather

Annual Weather Averages. July is the hottest month in Frankfurt with an average
temperature of 19°C (66°F) and the coldest is January at 1°C (34°F).

Waste Disposal Law

1. Knowledge in general issues on hazardous wastes and solid wastes
2. Prevention, minimization, and environmentally sound management of hazardous
wastes and of solid (non-hazardous) wastes and sewage.
3. Prevention, reuse and recycling of wastes.
4. Phase-out of toxic, persistent and bioaccumulative waste.
5. Environmentally sound waste disposal and treatment.
6. Preventing illegal international traffic in wastes.
7. Procedures for environmentally impact assessment, taking into account the
cradle-to-grave approach.
8. Establishment of combined treatment/disposal facilities for wastes in small and
medium sized industries.
9. Transfer of environmentally sound technologies and know-how on clean
technologies and low-waste production.
10. Inventories of waste production, their treatment/disposal, and contaminated
sites/
11. Dissemination of scientific and technical information dealing with various health
and environmental aspects of wastes.
12. Radioactive wastes and their environmentally sound management (safe storage,
transportation and disposal of radioactive waste).

Source:
http://www.un.org/esa/dsd/dsd_aofw_ni/ni_pdfs/NationalReports/germany/waste.pdf
Product Definition
List of Products Figaro:
Hot Drinks
● Brewed Coffee
● Americano
● Cafe Au Lait
● Cafe Latte
● Cafe Mocha Light
● Cafe Mocha
● Cappuccino
● Chocolate Cookie
● Espresso
● Macchiato
● Steamed Milk
● Tea
● White Chocolate Mocha

Cold Drinks
● Cappuccino
● Calamansi Frost
● Chocolate Light
● Coffee Caramel Light
● Coffee Caramel
● Coffee Jelly Float
● Dalandan Frost
● Iced Latte
● Iced Mocha
● Iced Tea
● Mango Frost
● Mocha Frost
● Mocha Light
● Strawberry Milkshake
● Vanilla Frost
Pastries
● Asado Pie
● Blueberry Muffin
● Cheese Muffin
● Chocolate Cake
● Chocolate Eclair
● Chocolate Muffin
● Food for the gods
● My Little Oscar
● Oatmeal Chocolate Chewy
 Other Menu

The products listed above are all to be included in the menu when brought to
Frankfurt, Germany. But, main focus will be on the coffee and pastries since Germans
love matching their coffee with something sweet.

Competition
Competitive landscape
Competitor A – MokkaTeeria
Competitor B – Metropol Café am Dom
Competitor C – Liebesdienste

Based on research from Google.com – Figaro PH has the same ratings with the
competitors. The listed competitors above are coffee shops in Frankfurt, Germany that is
similar to its status in Metro Manila, Philippines).
 The listed Coffee Shops above are the kinds of shops the Figaro to be exported in
Frankfurt, Germany will go for.

Provide an overview of product competitors, and their strengths and weaknesses

Competitor A
Product Overview: MokkaTeeria focuses more on the breads and other sweet pastries.
Strengths: Their breads and pastries have high ratings / located in the city
Weaknesses: The shop needs to do upgrades on their products / add more coffee to
their menu

Competitor B
Product Overview: This coffee shop doesn’t only offer coffees and pastries; but, they
also offer meals.
Strengths: The ambiances in their shops are great for the vibe the Germans are looking
for socializing / good food reviews/ located in the city.
Weaknesses: Upgrade their website with better details and to make it more user friendly
for internet user potential customers /

Competitor C
Product Overview: The reviews of their products such as the meals, pastries, and coffee
are great.
Strengths: The ambiances in their shops are great for the vibe the Germans are looking
for socializing or alone time / good food reviews / located in the city / giving the high –
class feeling
Weaknesses: The prices in their menu are too expensive; potential customers on budget
refer to a different shop instead.
Position each competitor’s product against the new product

Products Figaro MokkaTeeria Metropol Liebesdienste

Coffee EUR 5 EUR 6 EUR 6 EUR 8

Pastries EUR 4 EUR 4 EUR 6 EUR 6

Meals EUR 6 - EUR 6 EUR 12

Positioning
Positioning of product or service

Consumer Promise

Figaro PH to be exported at Frankfurt, Germany promises its future consumers

the high quality of coffee the company can offer at the lowest price possible. Together
with the pastries and meals to be offered, the quality will be maintained.

One of the goals of Figaro is to maintain and continuously improve on our quality to
attract customers and to better the company for growth.
Statement summarizing the benefit of the product or service to the consumer

Figaro Coffee benefits:

-​ ​Cheaper price offers than most competitors
-​ ​High quality
-​ ​Great ambiance
-​ ​Great employee service
-​ ​Satisfy cravings for caffeine
-​ ​Satisfy cravings for sweets

Launch Strategies
Launch plan
Based on our research, German consumers demand coffee that offers a full taste without
being time-consuming to prepare.After all the research are done in order to evaluate the locals of
Frankfurt.
The steps for diffusion are listed below:
● One way to capture the market in Frankfurt, Germany is to open up Figaro
Cafes in major malls and busy areas in the city, an estimation of around 3
stores is to be opened around Frankfurt on the first 6 months of operation;
continuous branching out if first branches are a success.
● ·Another best way to be introduced to the market is that Figaro offers
not only to certain taste preference such as strong taste, mild and aromatic,
etc. unlike the other coffee shops; Figaro offers all kinds of taste to all
kinds of coffee drinkers.
● Intense Market Advertisements are to be done to capture the local
caffeine drinkers such as – social media, print ads, local celebrities as
promoters, etc.
● Promos are to be introduced as well to capture more local drinkers.
● Majority of the locals in Frankfurt prefer mild tasting coffee; we will
promote the Filipino coffee beans since the Filipino taste prefer sweet, it
wouldn’t be difficult to promote the sweetness of Filipino coffee to German
coffee drinkers.
● Free tastes will be offered in groceries or places that are busy.
 Promotion budget
The budget for all promotions to be done in Frankfurt, Germany is PHP 1,500,000 or
EURO 28,098.234

1.​ ​Social Media – 120,000 PHP

2.​ ​Print Advertisements – 350,000 PHP
3.​ ​Free tastes – 30,000 PHP
4.​ ​German Celebrity Hire – 1,000,000 PHP

Communication Strategies
Initially, the targeted investors will be from the Philippines to fund all the projects involved in
opening Figaro in Frankfurt, Germany. Eventually we will open investments to local parties of Germany.
Once Figaro has been established, communicating to local investors will be done through local
advertisements such as the local newspaper and our own brochures.
Opening in major malls will allow the locals to see Figaro Cafes and begin to recognize Figaro.
While communicating to the consumers in the busy areas in the city is reminding them of coffee or
providing them a place to have a cup of coffee and relax to the ambiance.

4 Ps (strategies)
We placed Figaro between low price and high price in the market positioning. The price is not as
expensive as other coffee shops such as Starbucks. Local promotion involves intense advertisement such
as local newspapers, through social media and local celebrities. Figaro will be opened at major malls
where plenty of people frequently go to. Another place Figaro may open at are the busy areas in the city
where a lot of our target market who are between the ages of 16 to 49 pass-by. The target market are the
corporate workers, college students, coffee lovers and frequent shoppers. The product line will include
sweet coffee to promote the sweetness of Filipino coffee to the German coffee drinkers.

Packaging and Fulfillment

Since customer satisfaction will lead to better sales, fulfillment towards to customer is essential.
Feedback from the customer is essential in understanding what they prefer in order to keep a happy and
satisfied customer.

Public Relations
Strategy and execution
People can see our value by enhancing the quality of our service. Employees must
continue to be the very best. Our company must create an incentive to retain and reward the
performance of our employees. In building our image, We must determine our target audience,
majority of the locals in Frankfurt prefer mild tasting coffee; we will promote the Filipino coffee
 beans since the Filipino taste prefer sweet, it wouldn’t be difficult to promote the sweetness of
Filipino coffee to German coffee drinkers. · Promos are to be introduced as well to capture more
local drinkers. We will run promotions in conjunction of contributions.

PR strategies
Since it is already the modern era, where social media has become a powerful tool in
marketing, the company will also set up social media accounts to announce any new products or
promos. Associating our content with real world events and topical issues can be a great way to
engage audiences in this way our company’s products will be known. We will be using platforms
such as twitter, facebook, instagram, snapchat and other popular social media platforms.

PR plan highlights
● Position Figaro in Frankfurt as a must-have
● More new products must be launched
● Promote brand attributes: quality, trust
● Convince consumers that our product is better, affordable and more desirable than other
coffee shops.
● Possible to balance price with quality and prestige
● Distribute information to people
● Be seen as a recognized coffee shop who provides 100% quality coffee
● Bringing modernization and design to the market
● Participate coffee events

Other Promotion
Direct marketing
Intense Market Advertisements are to be done to capture the local caffeine drinkers such
as – social media, website, print ads, local celebrities as promoters, etc. We will create a website
Magazines and newspapers which are read usually by end-users of our products are a good
medium to promote our product. By using this as a medium we will be able to capture a lot of
areas as magazines and newspapers can also be found in a lot of establishments were we
usually go to e.g. restaurants, clinic, salons.

Co-marketing arrangements with other companies

 MRM//McCann is a global digital and direct ​marketing agency. One of the most common
and fastest ways for any company in any industry to promote its products by finding the right
co-marketing partner to work with. . We can build a new audience, and get a new type of content
in front of their audience.

Other promotional programs

Another best way to be introduced to the market is that Figaro offers not only to certain
taste preference such as strong taste, mild and aromatic, etc. unlike the other coffee shops;
Figaro offers all kinds of taste to all kinds of coffee drinkers. Free tastes will be offered in
groceries or places that are busy.

Pricing
We will be using psychological pricing for our pricing strategies in order to attract the target
market into buying our product. By using the psychological pricing, the customer will find value in the
products while believing they are not spending beyond the value.

Distribution
Distribution strategy
Figaro Warehouse will operate two delivery trucks with a third vehicle for special
deliveries between scheduled delivery days. Deliveries will be made Monday through Friday, and
will be strategically routed to minimize travel time and fuel costs - while maximizing production.
On average, we will service 20-30 accounts per day, with deliveries to each account twice a
week. As the number of accounts increase, the need for additional delivery trucks will continue to
be evaluated. With each additional delivery truck, routes will be restructured to maintain
maximum efficiency.

Channels of distribution

Figaro will use different channels to distribute its products outside the company-operated
stores. These include arrangements with foodservice companies, licensed partners, grocery
channel, warehouse club accounts, direct-to-customer market channels, joint ventures and other
specialty operations. Figaro will make a deal with supermarkets so Figaro’s products will be
available on grocery shelves. This will help the customers to understand about Figaro’s coffee
experience and shows them how they can bring that even at home. Beside the deal with the
supermarkets, Figaro will deliver whole bean and ground coffees to office coffee distributors,
institutional foodservice companies, hotels, airlines, retailers and restaurants. This will help
Figaro’s products to be known in many places and experience and taste the products. Using
 multiple distribution channels allows the company to reach a wider market, however, while doing
so Figaro needs to be careful with this approach due to the potential for channel conflict.

International
Since Figaro has not yet entered in Europe and in other countries, the company should be careful
of which country to choose to open because you need to know all the costs especially the distribution
cost. The issues of Figaro on international distribution is that they need to find ways to cut cost when it
comes to distribution of the coffee beans to stores and the location of where the beans are stored and
other materials. They should calculate to decrease the amount of unused space within each distribution
center. In this, they will have less cost, and less cost means that they have more profit. Figaro should
establish a centralized warehouse for all European countries in order to reduce costs. They can import
coffee and other products to the centralized warehouse and then further distribute them to be sold under
Figaro Company in their own stores. Figaro will conduct market research to enable deeper understanding
of Frankfurt markets, to avoid localization issues.
For pricing strategy, Value Based Pricing Can Boost Margins and Figaro can use value based
pricing to maximize profits, and they will use research and customer analysis to formulate targeted price
increases that capture the greatest amount consumers are willing to pay without pouring them off. Profit
maximization is the process by which a company determines the price and product output level that
generates the most profit. There is no doubt that pricing is an important element in the overall marketing
mix of a company as it is directly related to product positioning. At the same time, pricing also directs
other fundamentals like product features, marketing channels and promotional activities.

Success Metrics
First year goal
During the first year, the plan is to open 3 stores around Frankfurt: one in a major mall
and two in in the busy district in the city of Frankfurt, Germany.
Additional year goals
In the two succeeding year, we plan to open at least 3 more stores also in another major
mall and in the busy district in the city. If the performance of the first 3 stores go smoothly, we will
increase the number of stores opened to at least 5.
Measure of success/failure
Investment returns are usually more than 5 years after, however one can estimate the
target sales for each year. The first measurement for success is if the target sales is reach each
year.
Schedule
18-month schedule highlights
At the 6th month, a review on the semi-annual performance is to be conducted. Then at
the 12th month, another review is to be conducted and a decision on expansion will be made.

Timing

References:
http://www.worldometers.info/world-population/germany-population/
http://www.un.org/esa/dsd/dsd_aofw_ni/ni_pdfs/NationalReports/germany/waste.pdf