Question

Question 1: Why did Campbell’s soup fail to attract the Russian soup market in spite of favorable initial market research results and a seemingly suitable product for the targeted market? (Response length: 1 paragraph)

• Instructions: Identify, define, apply, and underline three (3) relevant concepts from chapters 1, 3, 4, and/or 8 in your response to question 1. Avoid vague generalizations. Be specific and stick to what the question is asking. Avoid irrelevant arguments. Be sure to analyze this issue from the viewpoint of international marketing strategy (segmentation, target market, product development, marketing research, etc.) and the marketing environment.

Articles:

Can M'm, M'm Good Translate?; Campbell Rethinks Soup as It Prepares to Enter Russia and China

Abstract (Summary)

In Russia and China, nearly all those bowls are homemade. In Russia recently, Mr. [Larry McWilliams] asked a

mother about soup and "her eyes lit up, she leaned across the table and for the next 30 minutes she told me what

soup she likes and how she makes it," he says. "You'd think I'd asked her about her kids."

Consumers in Moscow and China's Guangdong province, which Campbell will target with its early rollouts, are

becoming busier as those areas have grown more industrialized. And with a rising middle class in both China and

Russia, "you have improving consumer spending power, and as a result, the affordability factor is becoming more

favorable for Campbell," says Mitchell Pinheiro, an analyst with Janney Montgomery Scott LLC, who has a "buy"

rating on Campbell shares.

"Our research shows that Chinese consumers add MSG to food to lift the flavor, but they know it's not good for them and they're looking for an alternative," Mr. McWilliams says, adding that Campbell's soups won't contain any added MSG.

(c) 2007 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or

distribution is prohibited without permission.

American food companies have succeeded in persuading consumers in China and Russia to chew gum, guzzle soda and munch cookies. Now Campbell Soup Co. wants to sell those soup-loving countries on its signature product.

It won't be easy. Wet soup in cans or boxes has yet to take significant market share in Russia and China, partly

because of cost and because soup-making is a source of pride for many there. Campbell finally gave up after trying to sell canned soups in China in the 1990s. Other Western companies have had some success in the two markets, but the niche remains largely untapped.

This time, the Camden, N.J., company is trying a different approach. For the past two years, cultural anthropologists employed by Campbell have visited the homes of Russian and Chinese consumers to watch how they prepare and eat soup and to ask about the role soup making has played in their lives.

Although the company has learned that ready-to-eat soups still aren't likely to sell well, increasingly busy Chinese and Russians seem more willing to use it as a convenient base for other cooking. So Campbell this fall plans to roll out "starter soups" and broths designed to help consumers save time while making soups with their own touches.

"The biggest soup company in the world should be developing the biggest soup markets in the world," says Larry

McWilliams, president of Campbell's international division.

If Campbell gets it right this time, the move could help drive the company's sales growth, which currently relies heavily on the U.S., with $5.1 billion of its $7.3 billion in 2006 revenue. Campbell recently has turned around its core U.S. soup business with the introduction of low-sodium soups, new supermarket soup dispensers and new varieties of broth. At some point, the momentum from those initiatives could slow and the company will need new sources of growth.

Campbell officials won't disclose sales projections or how much they are spending to enter Russia and China. But

they are planning a big marketing push, including television commercials, billboards, subway ads, Internet ads and

product samplings.

Chinese and Russians eat soup more than five times a week, on average, compared with Americans' once-a-week, Campbell says. In China, 320 billion bowls of soup are consumed each year, compared with 32 billion in Russia and just 14 billion in the U.S.

In Russia and China, nearly all those bowls are homemade. In Russia recently, Mr. McWilliams asked a mother about soup and "her eyes lit up, she leaned across the table and for the next 30 minutes she told me what soup she likes and how she makes it," he says. "You'd think I'd asked her about her kids."

But consumers in Moscow and China's Guangdong province, which Campbell will target with its early rollouts, are

becoming busier as those areas have grown more industrialized. And with a rising middle class in both China and

Russia, "you have improving consumer spending power, and as a result, the affordability factor is becoming more

favorable for Campbell," says Mitchell Pinheiro, an analyst with Janney Montgomery Scott LLC, who has a "buy"

rating on Campbell shares.

Other food companies have made inroads into China, notably Yum Brands Inc. with its KFC fried-chicken outlets.

McDonald's Corp.'s fast food has proved popular in Moscow. In most cases where Western companies have done

well in the East, they have tried to adapt their offerings to native tastes.

Campbell didn't do a lot of listening to consumers when it tried to enter China in the early 1990s. Rather than tailor

soups to Chinese tastes and cooking customs, the company simply exported its condensed soups. Consumers, some wondering why they should pay for something that could be easily made from scratch, shunned the soups. Campbell pulled out.

In China, the basic soup stock is often made by combining water and monosodium glutamate, a flavor enhancer

known as MSG that has been linked to headaches, nausea and other health problems, the company says. The

Chinese use that mixture as a base in rice and noodle dishes as well.

"Our research shows that Chinese consumers add MSG to food to lift the flavor, but they know it's not good for them and they're looking for an alternative," Mr. McWilliams says, adding that Campbell's soups won't contain any added MSG.

Campbell gave women in Shanghai recipes and samples of broths it plans to sell under its Swanson brand. One

woman told Mr. McWilliams she didn't use any of the recipes but suggested using the broth as a replacement for

water and oil in a stir-fry.

The company has reformulated the broth to have a stronger chicken flavor, which its research shows is preferred by the Chinese. A second broth to be sold there will be an even more flavorful, cloudier version containing chicken, pork and ham stock.

Campbell plans to set up booths in grocery stores in China for demonstrations of how to use broth to make soup and vegetable dishes. Because cellphones are so popular in China, Campbell will send text messages reminding people to pick up some Swanson broth. In both countries, products will be carried in the biggest supermarkets first and then, as brand awareness grows, in smaller mom-and-pop shops.

In Russia, Campbell researchers learned that "Russians consider themselves the foremost experts on soup in the

world, and they have words they only use for soup, which tells you how ingrained it is in the culture," Mr. McWilliams says.

Among those words is navaristy, which refers to a thick, heavy soup like the ones Campbell plans to sell in Russia: a beef broth with pieces of meat, onions and potatoes; a chicken broth with chicken, onions and potatoes; and a

mushroom soup with large pieces of mushrooms, onions and seasonings.

The dense soups will have to be diluted with water, and Campbell plans to encourage Russians to use them as a

base for soup, adding their own meat, vegetables and herbs.

Campbell also learned that mothers do the bulk of the soup preparation, with daughters helping out by cutting vegetables.

So the company decided to target newlywed women as they take on the role of household soup-maker.

Campbell plans to give out coupons and recipes at buildings where couples register their marriage.

Campbell Soup To Exit Russia

Jargon, Julie. Wall Street Journal, Eastern edition [New York, N.Y] 29 June 2011: B.9.

Chinese and Russians eat soup more than five times a week, on average, compared with Americans' once-a-week habit, Campbell learned when it first studied the overseas markets.

Campbell Soup Co. said it is exiting Russia just four years after betting it would be a simmering new market.

On Tuesday, Campbell Chief Operating Officer and CEO-elect Denise Morrison said results in Russia fell below the company's expectations. "We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame," Ms. Morrison said.

The Camden, N.J., company knew when it entered Russia in September 2007 that it would be challenging to persuade a country of homemade soup eaters to adopt ready-made soups.

Chinese and Russians eat soup more than five times a week, on average, compared with Americans' once-a-week habit, Campbell learned when it first studied the overseas markets. In China, about 320 billion bowls of soup are consumed each year, compared with 32 billion in Russia and just 14 billion in the U.S.

It may be just as difficult to sell Chinese consumers on prepared soup. Campbell exported its condensed soups to China in the 1990s, but consumers didn't bite, and Campbell pulled out.

Campbell has since reformulated the broth it sells in China to have a stronger chicken flavor, which the company's research shows is preferred by the Chinese. It re-entered China at about the same time that it embarked on its Russia venture.

The soup maker employed cultural anthropologists to study the soup-making habits of customers in both Russia and China. The anthropologists spent two years watching consumers prepare and eat soup.

The company found that as consumers in Moscow and China's Guangdong province have become busier, they've grown more willing to use "starter soups" and broths as a base for their own soup and for other cooking. With a rising middle class in both countries, the company figured its products would be increasingly affordable.

But because sales in Russia didn't fare as well as the company hoped, it said it would close its Moscow office, eliminating about 50 positions, and wind down its business there. Campbell didn't say how much it invested in the market.

Campbell on Tuesday also announced other measures to cut costs, such as automating some packing operations. In total, the company plans to cut 770 jobs world-wide, including the positions in Russia.

All of the initiatives, including the exit of the Russian business, will result in pretax costs of approximately $75 million, most of which will occur in its fiscal fourth quarter ending July 31.

Answer 1

Solution:

Campbell's Soup failed to make its mark in the Russian market and had to exit the market in just 4th year of its operation. The product was well developed by understanding the food habits of the consumers and their preferences to ensure the consumers have their preferences in Campbell's Soup. The market research indicated a strong market of Russia and showed a great potential for business. Despite such favorable conditions, the soup failed in the Russian market.

The plausible reasons for the failure of any product can be attributed to the failure of the company and the product to understand the cultural and psychographic behavior of their consumers. This is the behavior that is dictated by the culture in which the target audience lives and hence as a product and a company it is necessary to have the product aligned with the cultural aspects of the target audience.

Russians are known for their specificity towards the kind of soup they make and it has their cultural touch in making the soup. Russians consider themselves superior in the soups and hence they deem to have enough knowledge and prefer to make homemade soup. Thus, the acceptance of ready-made soup was somewhat against what Russians believed culturally. This is one reason that Russians did not prefer Campbell's soup because of their traditional way of soup making. Also, people preferred no to use Campbell's soup as a base for further cooking.

This is why Campbell's coup failed in the Russian market.