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in Singapore has tremendous growth potential. According to Bruce Rolph, head of research at Saloman Brothers Singapore Pte. Ltd., People should increasingly focus on Singapore not as a mature market with low
earnings and growth potential, but as a uniquely positioned beachhead to get leverage over whats happening
in Asia. Finally, the Singaporean market still has no
clear leader in the specialty coffee industry. This means
that Starbucks still has a good chance to become one of
the top contenders in this market.
Despite the opportunities that exist for Starbucks in
Singapore, there are still obstacles that it must overcome
to be successful there. Competition is fierce, with fourteen players and thirty-eight stores between them (see
Exhibit 3). With Starbucks entry into the Asian market,
bigger retail stores are already gearing up for a coffee
battle. However, smaller companies like Burkes Cafe
and Spinelli are welcoming Starbucks entry. Their strategy is to open an outlet right next to Starbucks to attract
the customers that overflow from Starbucks.
One of Starbucks biggest competitors, Suntec Dome
Holdings, has already established itself in Singapore. Suntec Dome Holdings already has good name recognition
with Suntec Walk, Suntec City, Dome Cafe, and so on.
Suntec is distinctive from the other retail coffee stores in
that it is seen more as a restaurant than a coffee chain. It
targets a broader market segment with a lower budget
range. They are also backed by major supporters with the
ASE 3
DOWBRANDS, INC.
As a separate corporate entity, the DowBrands subsidiary of the Dow Chemical Company was only five
years old, although its genesis was with the marketing of
Saran Wrap in 1953. Saran Wrap, a thin plastic film,
was originally conceived to protect military arsenal
stored at the end of World War II, but someone discovered it made an excellent wrap for the preservation of
fresh and/or leftover foods. In time, Dow added other
food-care products and such cleaning products as Dow
Bathroom Cleaner to the line.
The parent company was a successful, $18 billion,
multinational chemical company, but the consumer-prod-
EXHIBIT 1
DOWBRANDSa
SELECTED DOWBRANDS INTERNATIONAL
DIVISION PRODUCTS
Canada:
Italy:
Brazil:
Argentina:
Japan:
Hong Kong:
Singapore:
Europe:
Ziploc trademark of DowBrands. Saran Wrap and HandiWrap trademarks of the Dow Chemical Company. Glad
used under license to DowBrands.
645
ucts portion had never reached what many executives believed was its full potential. Dow spent $1 billion for research and development, and its inventors dubbed the
molecule movers had an excellent track record for inventing new chemical compounds, but the company had
been less successful in realizing the full market potential
from those inventions. A notable example was a moisture-absorbing technology that Dow developed but sold
to Procter & Gamble. It became one of P&Gs most profitable products ever. Needless to say, Dow believed that
the rewards of such inventions were reaped more by the
successful marketer than by the successful inventor.
Based on the idea that a dollar in sales, of a specialty
product would deliver more profit than a dollar of basic
commodity sales, an ongoing discussion at DowBrands
was how to exploit markets for its inventions.
The mission for the consumer-products division was
to become a technology-driven packaged-goods concern,
with the basis for excellence coming from highly protected technical advantages. The importance of good
marketing skills could not be ignored, however, so in
1985, Dow bought the Texize Division of Morton
Thiokol, who not only made and manufactured a line of
complementary cleaning products, but also employed
personnel skilled in the design and marketing of consumer packaged goods. Texize was combined with the
consumer-products division to form the new DowBrands
business unit. In 1989, DowBrands acquired the European operations of the First Brands Company, which
marketed the well-known Glad brand of plastic bags and
wraps in the United States. Its Glad and Albal brands of
household wrappers were well established in Europe.
(See Exhibit 1 for a listing of major DowBrands products sold internationally.)
Division sales for 1990 were forecast at $1 billion,
with food care representing about a third of this amount
and international sales about 20 percent. Ziploc sales
at retail were about $300 million and represented about
70 percent of the divisions food-care business. The
president and chief executive officer of DowBrands reported to the chairman of the board of DowBrands.
ZIPLOC STORAGE BAGS
With the rise of private automobiles, home refrigerators
and freezers, and large supermarkets in the United
States after World War II, shopping trips for groceries
became less frequent than daily and the need arose for a
way to protect fresh food (and leftovers) from becoming
stale and hard. The need was met by aluminum foil, wax
paper, and plastic wraps, augmented in 1962 by small
plastic bags. The plastic bag (using a thin polyethylene
film) was first introduced as a wrap for sandwiches and it
grew in sales at more than 15 percent a year. Dow tried
to protect its own plastic-wrap business with the Handi-
646
In 1984, continued consumer-behavior research confirmed three distinct uses for Ziploc: storage (refrigerator and cupboard), lunch bag/box sandwiches, and
freezer. In addition, the Ziploc positioning was
changed to focus on an end benefit of fresh, good-tasting
food. The zipper feature was no longer the chief focus,
but was used to support the fresh promise. Advertisements differentiated the three product types (storage,
sandwich, and freezer), and Dom Deluise was selected as
the Ziploc spokesperson.2
Dow continued to make product improvements and
line extensions, including pint-sized freezer bags for single
servings, jumbo bags for nonfood use, wide-track zippers on
freezer bags, grip strips for easier opening on all products,
pleated bags for easier use, write-on labels for freezer
bags, and Microfreez bags for storing/reheating/cooking
in the microwave oven (which was not successful).
Dow management believed that a consumer information overload was forming by the late 1980s (because of the proliferation of new products) that would
lead to a big brand era. Because consumers had less
time or desire to experiment than in the past, this trend
would benefit major brands that had established good
recall based on dependability and value. Hence, in 1989,
Dow advertising began to emphasize Ziplocs quality
heritage. A new advertisement campaign focused on
put your trust in a Ziploc bag, and new package
graphics were aimed at improving the products positioning of high quality.
By 1990, zippered bags had obtained a 70 percent
share of the $600 million U.S. retail storage/freezer/sandwich bag market (60 percent of 365 million cases). Ziploc accounted for about half of the total dollar market
(about 40 percent of the total unit market); it was the seventeenth largest-selling nonfood item in U.S. food stores.
Competitors were First Brands Glad bags (about 25
percent of the total dollar market, split between zippered
and regular products), private-label bags (about 20 percent of the dollar market, roughly split between zippered
and regular), and Reynolds Metals Sure-Seal Zippered
Bags and Mobil Oils twist-tie Baggies, which together accounted for the remainder. First Brands had bought the
Glad business from Union Carbide in 1986 and, soon after, introduced a bag with a unique seal that changed colors when the bags had been properly sealed. Despite
Reynolds small share, Dow was watching its Sure-Seal
brand carefully, because whereas Ziplocs strategy had
consistently been to use consumer advertising and pro-
647
Average Price/
Nielsen Unit
Germany
U.K.
France
Italy
$1.06
.98
2.20
1.22
Estimated Average
Trade Margin
36%
40
27
33
The DowBrands planners expected such factors as increasing numbers of European home-makers in the
work force and the growing penetration of large refrigerators and freezers to push this segments growth. Appendix A gives selected data on major European markets.
FBE had sales of $96 million in 1988 with pretax
profits of $3 million. It marketed a full line of fcds with
strong shares in France and Spain (the Albal brand) and
in Scandinavia and Belgium (the Glad brand). The Glad
brand was sold in all the European countries except
648
STEWART JAMES
As vice president and global product director, James had
responsibility for all DowBrands businesses abroad. Reporting to him were the general managers of the companys operations in Canada, South America (headquarters in Sao Paulo and a plant in Rio de Janeiro, Brazil),
the Pacific Rim (headquarters in Tokyo), and Europe
(the former First Brands/Europe companies; headquarters in Germany).
James, 40, came to his job in October 1989 from
previous positions in marketing and sales at DowBrands
and at a southeastern food manufacturer; his most recent
assignment had been vice president of Sales for DowBrands. While he had no prior experience in interna-
tional sales, he was perceived by his colleagues as accomplished, aggressive, and well suited to lead DowBrands
into the international arena because of his energy and
all-consuming desire to succeed.
He made these comments in the most recent DowBrands newsletter:
Were going to do about $235 million this year thats in
excess of 20 percent of DowBrands overall sales. But Im
not so concerned about that increasing in terms of percentage as I am in terms of the quality of our business. My
vision for the future is that we should, given our size, be
considered a multinational company and not a global
package good company at this time.
My vision is to build critical mass in the top strategic
countries. Strategic countries are those countries that have
a large concentrated urban population and gross domestic
product and have the type of homemakers that can afford
to buy our products. . . . For example, Japan, with half
the population of the states and more gross per capita income than the U.S., is a tremendous opportunity. We must
stop thinking of Japan as a $20 million market and then go
to Taiwan, Korea and Hong Kong, etc. Instead, we ought to
think of Japan as a potential $100 million market five years
from now and therefore use these other satellite countries
to feed that investment. The top strategic countries are the
ones that count and the ones that in the long-term will
enable us to do other things.
EXHIBIT 2
DOWBRANDS
EXTRAPOLATED NUMBER OF MONTHLY
OCCASIONS FOR TOTAL POPULATIONS IN
EACH COUNTRY
Percentage
of households
represented
by survey:
Household
universe
(millions)
represented:
Average
number
occasions
per month,
per HW:
D*
85%
92%
GB
84%
649
EXHIBIT 3
DOWBRANDS
FCD USAGE OCCASIONS, WEIGHTED
INCIDENCE: SHARES OF THE GRAND TOTAL
NUMBER OF USAGE OCCASIONS/MONTH
Germany
France
G.B.
21,436
30,816
23
33
17
25
2
100
56
14
15
11
4
100
30
35
21
13
1
100
%
19
64
9
1
7
100
%
21
62
2
4
1
9
100
%
15
33
6
10
9
27
100
21.9
80.9
19.4
48.3
17.8
65.6
1,771
937
1,167
1,332
834
1,063
(439)
(103)
(104)
aluminum, plastic wraps, plastic bags, and rigid containers). In France, the biggest winner was rigid containers; in Germany, aluminum; and in Great Britain, aluminum. Plastic bags did not show a material win in any
country. Exhibit 7 details the substitution data within
each country.
A test of satisfaction with each wrap compared
with use revealed that in France, aluminum foil was highest in use and in satisfaction; in Germany, plastic wrap
was highest in use but rigid containers were highest in
satisfaction; and in Great Britain, plastic wrap had the
highest use but plastic bags had the highest satisfaction,
higher than in the other two countries.
In general, homemakers in all three countries displayed average-to-high levels of satisfaction with all materials across the majority of destinations and use occasions.
German homemakers tended to be less satisfied with substitutes than those in France and Great Britain. A summary of the three most important material attributes is
given in Exhibit 8. A perceptual map of users of each of
the fcds in each country is reproduced in Exhibit 9.
Respondents were shown a number of photoprompts of the major fcd brands and asked, for a number of image items (e.g., high quality, good value for
money, etc.), which brands were best or worst for that
650
EXHIBIT 4
DOWBRANDS
FCD USAGE OCCASIONS SUMMARY
BY DESTINATIONS & MATERIALS COMBINED
USAGE SHARES
F
Aluminum
foils
D
Plastic
wraps
Plastic
Rigid
food bags containers
Aluminum
foils
GB
Plastic
wraps
Plastic
Rigid
food bags containers
Aluminum
foils
Plastic
wraps
Plastic
Rigid
food bags containers
11
29
10
14
27
17
14
10
Freezer
Fridge
1
Kitchen
4
Cooking
1
EXHIBIT 4 (continued)
COMPARISON OF DESTINATION OF BAGS IN FOUR COUNTRIES
Base:
(Usage Occasions)
Fridge
Freezer
Microwave
Oven
Out of home
GB
USA*
(3,119)
(5,914)
(6,294)
(45,647)
%
24
76
100
%
27
61
1
11
100
%
18
37
1
1
43
100
%
22
14
63
100
EXHIBIT 5
DOWBRANDS
RECAP FCD USAGE OCCASIONS:
THE 10 MOST FREQUENT INDIVIDUAL OCCASIONS BY
COUNTRY (WEIGHTED INCIDENCE)
Germany
France
G.B.
21,436
30,816
12.7
10.4
4.8
14.7
6.8
7.7
7.9
3.2
3.1
3.6
4.1
2.3
2.5
4.3
8.6
3.1
3.6
4.3
10.9
10.7
21.6
6.3
6.0
18.4
6.1
5.3
4.5
2.6
72.2
73.1
3.1
6.9
64.8
651
EXHIBIT 6
DoWBRANDS
USAGE OF MATERIAL TYPES BY CLUSTER GROUPS
Cluster sizes:
NF
EG
HO
OP
EXP
RE
D
F
GB
13
18
12
16
15
18
16
23
38
20
14
14
12
16
9
23
14
9
D index:
share:
F index:
share:
GB index:
share:
99
13
123
22
76
9
47
8
109
16
93
17
118
19
82
19
106
40
91
18
77
11
104
15
128
15
130
21
134
12
118
27
80
11
84
8
D index:
share:
F index:
share:
GB index:
share:
84
11
83
15
73
9
84
13
103
15
98
18
89
14
113
26
84
32
138
28
48
7
125
18
113
14
142
23
113
10
87
20
100
14
159
14
D index:
share:
F index:
share:
GB index:
share:
46
6
61
11
96
12
58
9
69
10
82
15
99
16
97
22
96
36
121
24
101
14
113
16
108
13
131
21
60
5
137
32
156
22
178
16
ALU
WRAPS
BAGS
An earlier Awareness and Usage study uncovered six cluster groups based on an analysis of the pattern of respondents answers. The groups were described as follow:
RE Role Enhancer
High positive association with all items relating to home cooking, make own foods, home care, etc., but negative
with spend most of the day away from home. High awareness and usage of fcd brands. (Not found in Spain.)
EXP Experimentalist
High purchase of recently launched products. Tend to be away from home most of day. High microwave
ownership.
OP Own Produce Preserver
High scores for freezing produce grown by self or bought directly from producer. Not experimental. High
deep freezer ownership.
HO Home Oriented
High scores for home and cooking items. Not necessarily high for freezing. Tend to be non-working.
EG Easy Going
Lowest scores for home-oriented items. Tendency to score low on freezing items. Often spend day away from
home. Youngest group.
NF Non Freezing
Lowest scores on freezing items. May have high home-oriented scores. Low freezer ownership. Older group,
lower social class.
The box on the previous page shows the percentage of each cluster by country (e.g., the NF cluster represents
13% of the German sample but 18% of the French sample). An index is the ratio of a clusters share of usage compared to its size (e.g., the NF cluster in France uses 22% of aluminum which, compared with its 18% of the sample,
yields an index of 123.)
Source: Company records, dated May 1988.
(Note: See following page for explanatory notes)
EXHIBIT 7
DOWBRANDS
SUBSTITUTION BETWEEN MATERIALS
Germany
Result of net gains/losses
Exchange of switchings
17%
ALU
23%
WRAP
33%
5%
ALU
30%
11%
3%
1%
6%
4%
4%
4%
2%
WRAP
25%
4%
3%
1%
1%
2%
6%
BAGS
17%
R.C.
25%
BAGS
19%
R.C.
24%
1%
5%
GB
Exchange of switchings
ALU
30%
WRAP
35%
7%
ALU
36%
WRAP
23%
15%
5%
5%
2%
4%
7%
6%
2%
4%
BAGS
21%
5%
R.C.
13%
3%
2%
2%
BAGS
19%
3%
R.C.
21%
2%
6%
France
Exchange of switchings
12%
ALU
56%
WRAP
14%
ALU
32%
5%
WRAP
18%
1%
7%
3%
1%
2%
2%
7%
5%
BAGS
15%
28%
1%
3%
2%
17%
5%
R.C.
11%
BAGS
17%
2%
R.C.
33%
2%
653
654
EXHIBIT 8
DOWBRANDS
IMPORTANCE OF FCD MATERIAL ATTRIBUTES IN THREE
EUROPEAN COUNTRIES (% FOR LEAST, SECOND/THIRD, MOST
IMPORTANT)*
Second/
third
Least
Most
Important attribute in
F
GB
GB
GB
The sizes of the circles are relative to keeps food fresh & tasty in Germany, which
received the greatest percentage response across all questions and countries.
Source: Company records, dated May 1988.
655
EXHIBIT 9
DOWBRANDS
IMAGES OF FCD MATERIALS
ANALYSIS OF CORRESPONDENCE BASED ON USERS OF ALUMINIUM FOIL (A),
PLASTIC WRAP (W), PLASTIC FOOD BAGS (B), PERMANENT (PC) AND DISPOSABLE
(DC) RIGID CONTAINERS IN EACH COUNTRY.AXIS 1 (VERT.) AND 2 (HOR.) VARIANCE
EXPLAINED 86%
67%
Aluminum
Plastic FCD
A/F
Stays in place
Adapts well
W/GB
W/F
W/D
A/D
B/F
Easy to remove
B/GB
B/D
Recognize
Space in F/F
Inexpensive
Good VFM
19%
Isolates odor
Rigid containers
Airtight
Most important
attributes
(= Ideal fcd)
DC/D
DC/F
DC/GB
Resistant
PC/F
PC/D
Used often
PC/GB
In general, the researchers concluded that the greatest opportunity for Ziploc in Great Britain was for the
sandwich-bag market, but in France and Germany, it was
for Ziploc freezer bags. They were encouraged that one
of the most important fcd attributes discovered for all
countries was airtight closure, a major Ziploc selling
feature; they also noted the importance given to keeping
food fresh and tasty and isolating odors well.
THE DECISION
James was familiar with the marketing research results,
but he felt that they might not provide enough support
for launching an aggressive ZiplocTM program in Europe:
As detailed and well executed as it is, the research
only shows that there is promise in Europe, especially in
the large markets of France, Germany, and the U.K. It has
656
the usual defect in that it shows more about what is with respect to current products and segments than what might be
the prospects for an emerging premium segment. The detailed study was not carried out in Spain, since refrigerators
tend to be small and freezers non-existent, and everyday
shoppers apparently dont perceive the need for the superior protection of Ziploc. And frankly, this is the attitude
that some of our people still have about food-shopping
habits even in France and Germany. So, you can picture the
resistance I am getting from my management in Europe
against making the kind of investment spends we will need
to do to build the premium segment of zippered bags.
We have to use imagination: we might have done
more research in Spain, and we should do it in the rest of
Europe, all with an open mind for spotting opportunities.
When you ask customers to relate current usage to new
APPENDIX A
GB
Population density
Population 65+
Death rate
Total population
Household population in 2000
Household population
Median age
Rural population growth
Population in towns < 10,000
Population growth
Population in towns > 100,000
Birth rate
Population under 15
Size of household
Urban population growth
GB
Population density
Pers/Km2.1948
78
102
131
12.8
13.6
14.0
15.5
15.3
12.3
Death rate
Deaths per 1,000, 1944
8.3
10.1
8.8
11.8
11.7
8.8
39.2
55.8
57.5
54.8
81.0
248.8
15.2
23.8
23.1
22.1
25.8
184.4
Household population
Millions, 1967
11.7
21.1
20.4
21.2
25.8
94.5
32.5
34.3
36.2
35.5
38.2
32.4
.5
1.8
1.8
.7
233
D
245
USA
26
1.7
2
26
50
33
23
26
Population growth
Total % Change 196480
33
19
10
42
16
27
38
33
NA
Birth rate
Births per 1,000, 1968
13.1
13.6
11.0
13.4
10.8
15.3
21.7
20.4
17.7
18.7
14.7
21.5
Size of household
Av. number of persons
3.76
2.77
1.4
.4
3.04
.3
2.72
.2
2.31
.1
NA
33
2.87
.2
Source: Trends & Opportunities abroad, 1984 American Demographics Inc. IBM 87, European Basic Market Data,
G.F.K.
*
E is the international symbol for Spain and I for Italy.
657
658
GB
USA
Higher education
GNP per capita
Services
NA
Purchasing power
Industry
NA
E
Higher education
enrollement in
GNP per capita $
26
4.290
F
25
8.520
I
27
8.540
GB
20
8.460
USA
29
57
10.940
16.650
Services
% labor force 84
46
48
56
59
50
84
57
109
112
48
133
NA
Industry
% labor force in
37
41
35
38
44
31
59
78
79
83
NA
88
52
46
52
52
43
51
Women working
% women 14 44 working
27
41
53
56
52
62
280
250
110
120
170
180
Agriculture
% labor force in
17
12
22.0
10.8
9.8
7.5
7.1
39.0
75.0
480
11.5
1,881
420
500
D
(25.8)
GB
(21.2)
F
(21.1)
None of the
three appliances
Fridge only
20
21
I
(20.4)
E
(11.7)
3
20
25
52
18
% Housewives owning
Combined
fridge-freezer
only
33
30
59
Separate
freezer only
49
36
29
41
Both types
of freezers
10
12
12
3
1
GB
Separate
deep freezer
59
44
41
21
Combined
fridge-freezer
28
41
42
71
42
Any freezer
77
77
72
80
48
659
660
APPENDIX B
PREMIUM BAGS
SPAIN
Spains fcd market is $60 million and is the fastest growing European market at over 12 percent a year. FBE has
become increasingly enthusiastic about the growing
Spanish market and purchased the operating business
from its distributor in October 1988. They are the market
leader with Albal in aluminum and with Glad in wraps
and bags.
United Kingdom
($281M)
Germany
($245M)
Leaders
Share
Leaders
Share
Leaders
ELF/
Aquitaine
(Handy Bag)
FBE
Akzo (Propsac)
Private Label
22%
12
11
36%
Polylina
Br. Alcan
HD. Plastics
17%
11
3
65%
Melitta
Pely
Kraft
Share
10.8%
6.3
8.6
8.2
32.7
66.6%
Spain
($60M)
Leaders
Share
Leaders
Share
Cuki
Domopak
Comiset
22%
21
2
N/A
FBE
Reynolds
37%
21
N/A
Case 3. DowBrands Ziploc: Appendix B
45%
6
5
22%
Share of Total 5 Countries
Melitta
Elf/Aquitaine
FBE
Domopak
Private Label
Total
Source: Company records, dated 11/23/88.
Italy
($163M)
661