Getting consumers to hum along to your commercials and mistake your jingle for their national anthem is the dream of all marketing directors working in foreign markets. This is effectively what Gallina Blanca was able to do in Africa, thanks to a carefully conceived marketing effort adapted to local tastes. Granted, it took over three decades of hard work to arrive at the point where the Spanish producer of bouillon, instant soups and pasta had managed to achieve a successful commercial presence in 18 African countries.
Gallina Blanca first began exporting its products to Africa in 1972. In order for its bouillon to gain acceptance in the African market, the company had to make a number of adaptations, starting with the brand name itself.
The name, Gallina Blanca, which means “white hen” in Spanish, was changed to Jumbo, which is shorter and easier to pronounce in both English and French, the two lingua francas for most of the continent.
Its main competitor, Nestlé’s Maggi, sold its bouillon in 4-gram cubes. Jumbo sold its bouillon in larger, 10-gram rectangles, priced at the equivalent of two 4-gram Maggi cubes, so consumers were getting a bit more bouillon for their money.
In addition, the company made sure the tastes and colors of its products were in keeping with the preferences of the African palate.
These actions were supported by smart advertising campaigns, which were extremely respectful of each country’s indigenous languages, customs and traditions, often featuring members of the local population in its commercials.
Over time, the use of Jumbo bouillon became ingrained in African culinary traditions. With just a bit of bouillon, a handful of rice or pasta, and a few vegetables, any mother could fix her family a tasty, nutritious meal on a shoestring.
New Challenges Brewing
However, with success came capacity issues. These were solved by manufacturing the premixes or powders in Spain and then exporting them in bulk to Africa. Gallina Blanca then got local importers and distributors to set up factories outfitted with compression and packaging machines. This boosted local economies by creating jobs and generating tax revenue for local governments. It also strengthened Jumbo’s reputation as a locally produced product, with a Western image of quality.
By 2005, the company was facing new challenges: trying to differentiate itself not only from its direct competitor, Maggi, but from new local entrants and Chinese generic brands as well. Consumers, too, were growing more sophisticated and demanding, expressing greater concerns over food health issues.
At the time, the World Health Organization and other NGOs were promoting programs for fortifying foods in Africa, though no one had ever mentioned bouillon cubes specifically. Within this climate, Jumbo’s marketing and R&D executives began exploring the possibility of enriching its bouillon with nutrients. They leaned toward vitamin A, which helps people develop and maintain healthy eyesight, teeth, bones and soft tissue, and is recommended for reproduction and breastfeeding.
The R&D process cost around 150,000 euros. Adding vitamin A to the product would drive up the manufacturing cost by around 10 percent, putting the manufacturing price of each bouillon cube up by a CFA franc. If Gallina Blanca didn’t increase the retail price of its products, the ex-factory gross margin would drop by 12.5 percent. However, the suggested retail price would have to be increased from 25 to 30 CFA francs, representing a 20 percent markup on the existing selling price.
Gallina Blanca’s executives were reluctant to raise prices. African consumers have low purchasing power, and any price increase could seriously hurt sales volumes. What’s more, both Gallina Blanca and its competitor, Maggi, had gone years without raising their prices, so a change like this could cause major fluctuations in their respective market shares. In the end, a price hike was considered unfeasible.
Yet the questions facing Gallina Blanca’s executives remained: Should they go ahead and launch a new, vitamin-enriched product? If so, what would be the most appropriate business strategy to follow?
According to surveys, African consumers had indicated they might welcome such a product. Even so, it was not easy to project the potential market share of the new offer. What would happen if the new product had a negative impact on sales of its long-established Jumbo favorite? Some considered that Gallina Blanca should do it anyway, regardless of any negative consequences, gaining satisfaction instead from the knowledge that the company was helping to improve the health and wellbeing of African consumers, and that was enough of a return.
Please note: The figures cited in this case have been modified to protect the company’s privacy.
WHAT I WOULD DO
September 4, 2010 14:43:59
Innovation and price increasing is the only way to survive in the medium and long term. Not launching new concepts and keeping prices flat over years is a slow way to suicide.
However, many executives prefer to stay in the comfort zone for a few years before they get promoted or leave the company.
September 7, 2010 07:10:19
Por lo que estoy viendo, Jumbo le “declaró la guerra a Maggi”, a la cual considera su rival fuerte en el mercado. No está nunca de más repasar entonces las ideas de Sun Tzu en “El arte de la guerra”, que están más vigentes que nunca en los negocios actuales.
También recomiendo a Liddell Hart, historiador militar británico que también documenta muchos aspectos relacionados específicamente con la forma “indirecta” de afrontar al enemigo a fin de desmontarlo por donde él menos se lo espera. Ojo, enemigo aquí lo aludo a competidor en los negocios y no al aspecto negativo que sugiere la guerra como tal.
Es inevitable también invocar al maestro Peter Drucker cuando manifiesta que si se trata de una empresa comercial, debes entonces dedicarte exclusivamente a dos cosas: mercadotecnia e innovación, toda vez que en esta clase de empresas, estas dos variables son las que producen beneficios.
Recuerdo cuando Verizone intentó establecer sus bases en Europa con Vodafone: el fracaso inicial fue no haber entendido la cultura de sus empelados entre ambas empresas. Eran distintas, así de simple, y este pequeño detalle se les pasó por “alto”, y asumieron que los cambios culturales no generarían problemas. Igual valdría la pena comparar a Verizone con Jumbo: NO SE DEBE VER A AFRICA COMO UNA INCÓGNITA para las empresas, son las empresas quienes son una incógnita para AFRICA, ya que ellos también tienen su cultura e idiosincrasia.
Ahora viene mi parte favorita: las ventajas competitivas. Para poder competir contra Maggi y destronarla tendría que pasar que esa empresa se vea inmersa en escandalos de higiene e insalubridad y sus productos se fueran a pique, toda vez que ya ellos son muy conocidos a nivel mundial y sus productos también han sido bien acogidos. Ahora bien, dejando a un lado lo anterior (es muy remoto que ocurra), si Jumbo decide incorporar al mercado un producto vitaminado, la ventaja competitiva de Jumbo debería girar entorno a dedicarse a ofrecer en AFRICA de ahora en adelante productos vitaminados, ya que de forma diferenciada marcará distancia de su competencia y será vista de ahora en adelante como una empresa que ofrece productos alimenticios, y no “productos de condimentos”. Es decir, los productos de Jumbo estarían buscando cambiar el hábito de consumo de la población-objetivo. Razón por la cual es allí donde deberían apuntar los estudios de I+D, para tratar de ver si la gente quiere cambiar sus hábitos en el paladar o si quiere comer con nutrientes.