Summary
Several supermarket chains from Mexico have experienced bad incursions into the US, trying to reach the Mexican customers that live there. Something that they have learnt is that the customers do not shop as they do in their original environment in their country. Gigante and Liverpool (the biggest department store in Mexico) are two very good examples of failures, trying to reach that market. There are several things that have to be brought in consideration before managing the market in the same way they do in Mexico. Small independent stores as “The Gonzalez Northgate Market”, “The Metate Market” and “El Super” – The Chedraui brand for USA (the Mexican private company, which is the third most successful supermarket chain in Mexico, just behind WalMart and Soriana) – have experienced success in the market, while others fail. And which are those successful factors that WalMart should take into consideration for their business model?
Analysis
There are several factors that a company that is trying to reach the Hispanic Market in the USA needs to consider, in order to succeed in this complex but profitable market. First of all, let me show you an example of how this market could be, with a very popular product: Coca Cola. Nowadays, there are several exporters in Mexico that send soft drinks to US. They used to export traditional brands in 12 oz glass returnable packages, arguing that the consumer like them because of nostalgic issues. After a deeper research, we could find out that some of those brands were even unknown in Mexico, and nostalgia was not the main reason they were buying the product. There are differences between the products in both countries. First of all, gas. Mexicans like more gas in the soft drink than Americans. Secondly, there is the sweetness of the product. While Mexicans like sugar, American companies use fructose or other sweeteners. Finally, glass packages are preferred, because they keep the product colder, with more gas, and as they say, you can better appreciate the flavors – good drinkers will never take liquor in a plastic glass. And pricing is not an issue for them. A case of 24 bottles of 12 oz glass returnable of Mexican Coca Cola, can be sold to a retailer in prices between $19 to $23 dollars, while an American Coca Cola case of 24 bottles of 20 oz PET are sold at $9 dollars. This is 4 times the cost per oz of American Coca Cola. Today, Jarritos and some others brands are selling the product in 12 oz glass non returnable, directly from plant, avoiding some of the Mexican exporters to earn more money. In the same research, we could have seen that successful brands in the Hispanic Market in the US were not always successful brands in Mexico in several products. Some issues to consider that are: 1) 60% of the Hispanic population has already born in US, and may be they have never been in their original countries. They do not know the brands or products, as well as supermarket chains or retailers brands. 2) Most of the remaining 40% are coming from poor communities, where they do not have access to several brands and products, so may be they do not know them either. 3) They didn’t have enough money to buy in their countries as they do in America. Now they have possibilities they didn’t use to have, so it changes the consumption patterns. The median family income in the United States is around $34,000 dollars, almost 4 times more than in their countries.
With all those factors we can say, that the experience in the Mexican Market is not necessarily an advantage for the Hispanic market. Something important is that the popular products could be different, as well as positioning in consumer’s minds, pricing strategies, packaging, preferences and even flavors.
