Marketing
...ncentrated in urban areas, most of them aged between 15 and 59 y.o. Italians are well educated as the literacy rate approximates 98% of the population. TV and radio penetration is 1 per 3.9 persons, which indicates that an average household of 4 people have access to media communication. Rice sales are growing over the years as Italian’s are seen this commodity as an alternative to pasta, an easy to prepare, versatile, healthy and easily digested meal. Italians are quality concerned consumers as well as brand loyal. Consequently, the Gallo logo is widely recognized and symbolized for Italians a trustworthy, good quality traditional brand. The country legislation requires that each rice variety should be sold separately. The consequences of this restriction are extended product lines since different rice varieties cannot be mixed and increasing cost of production, as the company owns production facilities in Italy. Argentina The economy is very weak indicated by the poor makroeconomic conditions of Argentina with the lowest per capita food expenditure and a considerable high inflation rate. The instability of the economy over the last decades, with cycles of strong growth and consumption and longer periods of recession, suggest a closer look into the market conditions. However, the economy is more opening to foreign investments, through a stability and deregulation program launched in 1990. As the above table indicates, the greater percentage of the age distribution of the population is for people between the age of 15 to 59, whereas the growth of the population approximates 1% annually. Population literacy rate is stood at 92%, which is considered fairly low compared with the other two markets under investigation. Extremely peculiar is the fact that although Argentineans have access to a TV set per 4 people, radio penetration on the other hand comes to only 1 person. Argentine consumers have developed over time a demand for ready food products. This was the outcome of a change in lifestyles with consciousness given in both quality and price. Average Argentine’s households consuming rice at least once a week whereas 30% at least 3 times per week. Although, traditional rice is an important ingredient in the Argentine diet and enjoys a high rate of consumption either as a main or side dish, quick or precooked rice is fairly new to the market and is slowly gaining popularity. Food products can be imported with their original packaging, still must having certain information fixed on the label written in local language, due to the low literacy rate. Nutritional information is not necessary but it can be included. There are no import quotas for food products in Argentina nor non-tariff barriers. Poland The government as well as other regulatory bodies are more influential in emerging markets than in developed country market systems. This represents factors from the recent history of Poland as its closed market, the need of the government to create and interfering in business activities as the economy grows, put a constrain for foreign investing activities. However, the early market establishment of the F&P Gruppo, can result in benefits and favorable position from the government as it demonstrates a commitment to the Poland’s emerging market. The country underwent rapid cultural and political changes in the 1980s and as a result geographically closed countries like Germany, Italy and France seized the opportunity of a new starving market for consumer goods. With a fairly low GNP per capita and the lowest per capita expenditure for food products, Poland’s market need further examination as rice is not a major crop of agricultural production. Although the high inflation that struggle Poland, consumers are becoming increasingly sophisticated in quality matters. Rice is perceived as a substitute for potatoes, as a booster in soups, in cabbage rols or in puddings. As the average basic meal consisted of meat, potatoes and vegetables, rice had a low quality image. In addition, before Poland was liberalized imported food such as rice had been subsidized by the state. The problem is essentially that in Poland, rice is rather new product. Prior to 1989 it was sold in dirty brown bags. Subsequent, there was little knowledge of different types of rice, little understanding of nutrition and poor exposure in retail shops. Labeling was carried initially at Spanish text to which a Polish sticker had been added. 2.2 The industrial environment F&P Gruppo is one of few worldwide enterprises having a vertical operation of producing and marketing rice products. The company holds a proprietary on manufacturing processes and packaging of rice. The Gallo product varieties consist of white rice, parboiled rice, and brown rice as well as dehydrated and quick-cooking rice. The rice sector tends to be dominated by a relatively few large producers, and large farms have become more prominent over the past decade. Rice is a capital-intensive crop as demonstrated by the value of land, buildings, machinery, and equipment. In 1997, among all field crops (except cotton), rice had the highest per-farm machinery and equipment The international rice market is thin and volatile. Only about 6 percent of production is traded annually, compared with about 18 percent for wheat, 25 percent for soybeans, and almost 13 percent for corn. Much of this thinness is due to policies in many countries that bar imports and protect local producers. With only a small share of production traded in global markets, a production shortfall in a major importing country, such as Southeast Asia, account for nearly all the remainder. The global rice export market is highly concentrated. The top six exporters are Thailand, Vietnam, the United States, Pakistan, India, and China, which account for more than 80% of world trade. Thailand is the top rice exporter, shipping more than 6 million tons per year and accounting for almost 30 percent of global rice trade.1 Indica rice, which cooks dry and separate accounts for about 80% of global rice trade. Japonica rice, accounts for about 12% of global trade, cooks moist and clingy. In addition, aromatic rices, primarily basmati from India and Pakistan and jasmine from Thailand, account for 9% of global trade and typically sell at a premium to indica and japonica rice. In 1991, the world rice production was around 500 million metric tons, and consumption that varied significantly by geographical market, account for 350 million metric tons. The 2 main strains of rice, indica grains that is very popular in northern Europe and japonica grains well-liked in southern Europe. Rice can reach the consumer in many forms, as Paddy, Cargo, White, Brown, Parboiled and precooked. Most retail rice sales are of basic milled white rice, as this is the second most important rice subcategory. Specifically, Gallo handled 200,000 tons of milled rice worldwide, valued at 6 times the average world crop price of cargo rice. The success of the industry in a competitive world depends largely on the pace of innovation. Research, development and extension are the fundamental elements needed to develop ecologically sustainable production systems, increase the efficiency of production and produce rice and value-added products which meet consumer expectations. Technology is expected to continue its rapid rate of development. It will be seen in precision farming, land use monitoring by remote sensing, computer-based applications in every aspect of farm management and operation and introduction of genetically modified crops. Prices are expected to remain variable on world markets and trade to be corrupted. That problem will be offset by better market research and awareness and increasing use of niche markets, like the eastern European emerging markets. Deregulation, push and pull strategies are very common as the industry undergoes through a consolidation phase. In addition, there is widespread recognition by urban and rural people of the over utilization and misuse of natural resources, such as water which is becoming more expensive and less available. That and many more aspects of natural environment, will somehow affect industry practices, which will progressively change to comply with legislation. Increasing cultural diversity, disposable income and education of consumers has generated wider possibilities for supplying niche markets, as well as demands for safe food that meets market specifications. Quality and safety are becoming mandatory issues, requirements for certified food products are increasing in all of the 3 markets under investigation. Globalization is a dominant economic force for the foreseeable future and in order the rice industry to benefit from it has to continuously seek efficiencies at all levels of the supply chain and, provide products which meet consumer demands. 2.3 Competition Increased competition in these markets gave signs of waning profits for the firms operations. As both the Italian and Argentinean markets are fairly matured profits are becoming harder to realize as competitors gain considerably market size. Italy The Italian retail market is fragmented with many local and regional players selling their own brand names. On the other hand, grocer...