Market Analysis - Meso level: The closest substitute

Next we want to take a look at the most potential future competitor - Soylent. 

Soylent is the closest substitute for Ambro – and also behind the idea of Ambro itself. Soylent provides a full food substitute, just like our case company – but differs from Ambro in such a way that it is not organic. Otherwise the idea is quite similar: one mixes the powder with water (or other liquids) and the drink (meal substitute) is ready. However, unlike Ambro, Soylent advertises that one could give up all food if only using Soylent. On their website, it is even said: “What if you never had to worry about food again?” Ambro’s founders are making a clear distinction in this by stating that they do not intend people to live solely on Ambro (even though it is nutritionally possible) – they value the social atmosphere of eating too much.

Soylent is actually quite a new product as well. At the moment a customer needs to wait for over a month for the mailing (“order now and receive early 2014”). Also, the product is only available in the US and intends to go international in mid-2014. The company has been successful in collecting capital; they currently have raised over $3 million through crowdfunding and private investors.1

Positive aspects of Soylent are 

• Relatively cheap price; “a week’s worth” (21 meals) package costs $65, making one meal cost $3.10. ²
• Full feeling afterwords ³
• Noble side-idea: Soylent has also been praised for tackling environmental problems by providing a solution to the global food crisis. It is nutritional, inexpensive and can easily be transported to countries with food shortages. However, $3.10 for a meal isn’t particularly cheap in the poor countries. ³

Negative aspects of Soylent 

• Contains lots of chemicals (oat flour, maltodextrin, rice protein, canola oil, potassium gluconate, sodium, iron, zinc, chloride) ³
• Taste raises mostly negative reactions (“tastes like medicine”) – however some like it ³
• Bad smell ³

In an experiment, Soylent was used for 30 days in a row without eating anything else in addition. In that project, also other negative aspects were brought up. First, the test user’s jaw started aching because of not having used the muscles. Second, the test user experienced depressed feelings. Food often serves other purposes than its core as well, and one of the most important is the social side of eating; the test user found it hard to join friends who met for eating. Third, the test use actually lost weight during the experiment so that a doctor recommended no exercising during the diet. Losing weight would of course be good for obesity problems, but there are also a lot of people who should not lose any weight.3

Soylent is marketed as the food of future – replacing the need to cook. However, the experiment shows – which can be backed up also by most people – that food serves a social purpose which should not be totally abandoned. Therefore, if Soylent would position itself more similarly to Ambro – being a substitute for busy times instead of a full-time diet – it could provide a great threat of substitute or even a direct competitor, should it decide to enter the organic market. Still, one question prevails:

Would Soylent really enter the organic market?

Their core product is quite different; if made organic, the product would become more expensive as well, losing the image of inexpensive meal substitute that could even help the hunger. The core difference is summarized quite well in the article on Wired: "Soylent's goal is to be synthetic and affordable," "Ambro is organic and premium". We believe Ambro should definitely keep on following Soylent, but at the moment the product does not offer a direct competitor. However, such as Ambro followed Soylent, it is likely that new competitors will come. 

Sources: 

1. Soylent Funding Announcement http://blog.soylent.me/post/64789154918/soylent-funding-announcement
2. Soylent Website https://campaign.soylent.me/soylent-free-your-body
3. Blackmore, W. 2013. The Soylent Experiment: Living off "Liquid Goop" for 30 Days. Takepart [online]13 November. Available at: http://www.takepart.com/article/2013/11/13/soylent-experiment-living-liquid-goop-30-days
4. Kelly, G. 2013. Premium Soylent rival fuels the drink revolution. Wired [online] 14 November. Available at: http://www.wired.co.uk/news/archive/2013-11/14/commercial-soylent-variant 

Market Analysis - Micro Level: SWOT Analysis

After having analyzed Ambro's market on the macro and meso level, it is now time to move on to the micro level and take a closer look at the company itself. Therefore, we have conducted a SWOT analysis, which we will present in the following:

One key strength of Ambro is the uniqueness of their product. Since it is completely new to the market, they are not facing any direct competition. Specific product characteristics, such as organic ingredients and simple usage, make it easily patentable. This could help to prevent other companies from entering the market. Other strengths are related to their management team, innovation capabilities and connections based on the start-up Sauna.

Weaknesses of Ambro mainly stem from the fact that it is a start-up. They are lacking financial resources and operating processes still need to be improved. Moreover, some severe challenges with regard to the product itself need to be overcome.

Ambro's strength regarding the newness of the product result in some important opportunities for the company. First mover advantages might be realized and long-term customer relationships can be established. Furthermore, trends towards consumers' increased awareness about healthy food will benefit the company's growth.

Particularly threatening for Ambro could be reactions of companies offering substitutes. They might possess far more financial resources and be capable of developing a product outperforming the one of Ambro. Besides, new entrants could appear and threaten the company's position. Two practically related issues concerning the organic label and the name of the product might represent severe threats when entering the American market.


This SWOT analysis has shed light on several weaknesses and threats Ambro will have to deal with in the future. We feel that the following challenges in particular need to be overcome in the mid-term:

1. Taste: the drink is no real enjoyment, it is not particularly good tasting. The taste can be enhanced by mixing the powder with avocado/banana/juice etc., but then the drink itself is not as convenient anymore.
2. Packaging: at the moment, Ambro can only be bought in a large package that is not convenient to carry around. However, they are considering to change the packages to portion-size. 
3. Price: compared to other substitutes, such as Soylent, Ambro is rather expensive. During the pre-sales phase, a package of Ambro costs 79€ with international shipping (two packages with shipping for 119€). 
4. High transportation costs / production: deliveries outside Finland are quite expensive. Therefore, Ambro needs to find partners for production in the US. This would decrease transportation costs and increase customers' satisfaction by offering smaller package sizes. Moreover, local producers are more easily accepted by the country's authorities.

We are getting closer to the publication date of our final marketing plan. So stay tuned!


Sources:

1. The 11 Hottest Startups in Northern Europe http://www.businessinsider.com.au/hottest-startups-in-northern-europe-2013-11#indooratlas-wants-to-become-the-gps-of-indoors-1
2. United States Department of Agriculture Website http://www.usda.gov/wps/portal/usda/usdahome?navid=ORGANIC_CERTIFICATIO
3. Press Release: Ambro RELAX Introduced into New Markets in Texas and New Mexico http://www.prweb.com/releases/2011/6/prweb8519101.htm

Market Analysis - Meso level industry analysis

Next we want to investigate the competitive environment for Ambro in the US market. For this, we first conducted an industry analysis according to Porter’s five forces.¹

Threat of new entrants

As Ambro is the pioneer in the market, potential new entrants may wait for Ambro to solve out all obstacles before other companies enter the market. Therefore, Ambro indeed has to be prepared for new entrants, who could enter the market with less effort – all the initial problems having been solved. Thus, the level of threat also depends on how soon possible entrants would come to the market.

These new entrants could be ones diversifying from other markets. That way, these firms could take use of their existing capabilities and cash flows. The company of Soylent could provide a potential new entrant. After all, the idea is highly similar - providing a quick meal solution – and thus Soylent might come up with an organic version at some point. Soylent has been very successful in getting funding and thus the business has started to flourish fast. Ambro, however, is only starting their business and still needs to collect lots of funding.

The degree of the threat of entry affects the potential of the whole industry. The degree of entry barriers can be somewhat determined by looking at the barriers of entry that exist. Supply-side economies of scale are high for such a premium product. The price of the product is relatively high, but with larger production amounts the prices are likely to fall. Some kind of demand-side benefits of scale may exist (consumers getting discounts when ordering more), but this is not as important as on the supply side. Customer switching costs are quite non-existent – being a consumable product, the product itself can be switched quite immediately. Capital requirements exist to some degree. However, if potential new entrants came from already existing companies, these companies could possess enough of capital needed as they are. Incumbency advantages independent of size are quite low – unless Ambro succeeds in creating high enough brand equity. This has been seen with other food products as well – even if similar products, the ones with the highest brand equity seem to prevail (e.g. CocaCola vs. Pepsi). If using internet as the distribution channel, the access to distribution channels creates no barrier of entry. However, if Ambro is able to get the product into large online stores, they may get exclusive contracts which would increase the barrier of entry. Restrictive government policies are quite limited. Naturally, patents restrict making a copy of the existing product and there are some safety regulations to be filled, but otherwise no high barriers. 

All in all, it is quite easy for new entrants to enter the market - Ambro will definitely face competition. Thus, a lot lies in Ambro’s ability to build strong brand equity. Also, Ambro will perhaps need to place their prices down to deter competitors – which is difficult at this starting point of business. 

Threat of substitute products or services

Substitute products for Ambro would be other convenient meal substitutes, which do not have to be organic if they are still perceived as healthy. Soylent may be seen as one, as well as any readily packaged, easy-to-take along snacks such as sandwiches, drinkable yogurts, fruit, etc. By choosing many of these simultaneously, a full meal can be formed – even though the nutritional value may stay a lot lower. Ambro’s substitutes often offer less pricy options, and with better taste (excluding Soylent). Also, switching costs are low. Thus, threat of substitutes is quite great, and therefore Ambro needs to put a lot of effort in highlighting its advantages: being organic, full-nutritional and of very high nutritional value. 

Bargaining power of suppliers

Some suppliers of Ambro – such as those of organic foods - do not depend heavily on the small niche industry for their overall revenues. However, some suppliers may be concentrated on superfoods – thus very niche markets, when their bargaining power is smaller. The power is somewhat increased by the industry’s switching costs – if Ambro needs to switch the supplier, it may have to adjust its production or even get new certificates to prove the quality of the new supplier. Often there are substitutes for the suppliers, and suppliers can also easily threaten to work with possible new entrants (competitors) as well. Therefore, bargaining power of suppliers is average.

Bargaining power of buyers

Ambro (and the whole market) has quite a few buyers in the sense that it serves a niche consumer market. Also, buyers face no switching costs, and thus they have negotiation leverage. However, the target consumers are not overly price sensitive, as the product itself is a premium quality product and the target audience is high-earning. Thus, buyers have a lot of negotiation leverage but are not that price-sensitive. All in all, the bargaining power of buyers is of average level.

 Rivalry among existing competitors

Ambro is a premium product without existing direct competitors. However, if one widens the range of existing competitors to cover the non-organic substitutes, the Soylent provides the most similar option at the moment. Therefore our next post will concentrate on analyzing that.

Whole framework based on:

1. Porter, M.E., 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, (1), p.78-93. 

Market Analysis - Macro level: PESTEL

After deciding that US market is the best market to enter, we started conducting thorough market analysis to be able to conduct a clear marketing plan for Ambro.

First, we examine the macro environment with the PESTEL analysis. Such environmental analysis is extremely important for marketing in an international environment, as marketing activities and tactics are largely affected by the certain business environment.1 

	Opportunities	Threats
Political	On average low government regulation and intervention: a historically laissez-faire mentality	Strict regulations regarding food safety and marketing messages Labeling the product as food supplement instead of substitute?
Economic	High GDP per capita (purchasing power) Heathly GDP growth rate; averaging at 2-3%, which is higher than the average inflation rate (1-2%) High labor mobility	Heavier than average fiscal regulations Not fully recovered from economic crisis
Socio-Cultural	62,1% of the USA is overweight.2 Americans in general eat unhealthy. Americans are increasingly health conscious which results in a growing interest for products like Ambro.	The majority of the population is not, or only to a minor extent physically active which might indicate a reduced interest for healthy drinks.3 US citizens are quite used to taking dietary supplements, Ambro needs to put extra effort in standing out.4
Technological	Highly developed country with good infrastructure and major opportunities for internet distribution	The relative number of Startups in the U.S. is on average higher than elsewhere which might make it more difficult to reach consumers.
Environmental	Slowly increasing interest towards green or ecological products. 5	The mentioned benefit also means an increased interest in a green production of these products, so extra effort there would be needed
Legal	Import taxes can be avoided when producing in the US. On average lower corporate taxes than in Europe	Abeyance to various health and safety laws Possible trademark problems on the use of “Ambro” in the US Definition of organic is more strict in the US; requirement for 95% organic ingredients

PESTEL analysis often ignores some very important factors such as history and language, which are crucial for companies exporting to other countries. PESTEL looks at the market from the domestic point of view and ignores the international trade rules. Therefore, IMEA (International Marketing Environmental Analysis) would be a better tool for international marketing; it includes factors such as History, Economic, Language, Politics, Social, Financial, Rules (International trade), Environmental, Demographic, Infrastructure, Culture and Technology.1 

However, when we take a further look at this, it seems that IMEA Analysis does not provide much further value for the case Ambro; Ambro is only launching the whole product, straight in the US market. Also, their aim is to find local producers since the group does not want to start exporting to the US. Exporting might come in question later on in Europe, where production could be concentrated in a few areas. Thus, IMEA framework can be used later on when expanding further in Europe.

Sources:

1. Clarke, G. (2005). Internatinoal Marketing Environment Analysis. Marketing Review, (5), 159-173.  
2. Wang, Y Claire, McPherson, Klim, Marsh, Tim, Gortmaker, Steven L., Brown, Martin. Health and Economic Burden of the Projected Obesity Trends in the USA and the UK. The Lancet; 2011.
3. Health, United States, 2012. With Special Feature on emergency care.
4. Gahche, J., Bailey, R., Burt, V., Hughes, J., Yetley, E. Dwyer, J., Picciano, M.F., McDowell, M. & Sempos, C. (2011). Dietary Supplement Use Amon U.S. Adults Has Increased Since NHANES III (188-1994). NCHS Data Brief, 61.
5. Cherian, J. & Jacob, J. (2012). Green Marketing: A Study of Consumers’ Attiutde Towards Environment Friendly Products. Asian Social Science, 8(12), 117-126.

Internalization: analysis of other markets

To justify our choise of the US, we have analyzed other potential entry markets for Ambro in Europe. We mainly looked at the population, purchasing power and area specific trends. These are the highlights:

Germany

• 80 million people (US Census Bureau)
• High purchasing power of 122 on the Eurostat Index. 
• Increasing gym subscriptions and increasing willingness to pay for health.
• Organic foods very popular in Germany 
• Germans purchase food and beverages on the basis of 'value for money'
• Translation ought to be outsourced and might be too costly
• However, German-speaking area larger when counting Austria (8 million) and Switzerland (German-speaking 74% out of 8 million), 

Nordics (Denmark, Sweden and  Norway)

• 20 million in population, far less substantial than Germany and the US 
• Very high purchasing power (196 for Norway as the highest, 125 for Denmark as the lowest)
• Less shipping costs due to geographical location (if produced in Finland)
• Growth potential for private label food products (Foodnavigator)
• Food culture of the 'Nordic Diet' which encourages healthy eating
• Families seldom eat together - could be potential for on-the-go foods
• Translation costs relatively high for a small number of potential customers in three different languages

United Kingdom

• 63 million in population which is quite substantial
• Moderate purchasing power of 110 on the Eurostat Index
• High growth of obesity indicate limited interest in a health food product
• More than 60% of the population have a negative and fatalistic attitude towards their own health
• No translations needed for the original product packages (in English)

Southern Europe (Spain, Portugal and Italy) + France

• 184 million in population 
• Low purchasing power, with France as the leader with 108 but others with less than 100 on the Eurostat Index
• Language barriers: level of English knowledge lower than in other possible target markets; all the materials need translating into multiple languages
• Strong dining culture which emphasizes home cooked meals
• Thus, this area has the least potential customers

Our research on other countries have enabled us to draw significant conclusions. Firstly, German-speaking area has enough of people in numbers, people have enough of purchasing power and preference for organic products. However, their 'value for money' attribute would indicate that in Germany, people generally don't want to pay too much for food. Still, Germany - due to its size and potential for healthy products - would be a good next market to target. Secondly, in the Nordics people are too few in number but on the other hand, the food culture leans heavily on healthy eating. Thus, Ambro could have potential. However, it doesn't make sense to enter this market before the sales volumes are high enough in other markets, due to the very small niche market of the Nordics.

Thirdly, obesity and lack of positive attitude towards health dominates the view of the UK consumers. However, Ambro targets a small niche market and this group of consumers could exist in the UK as well. Also, there are multiple other nationalities living in the UK, often in extremely busy jobs in the financial center of London. Also, entering the UK would not require translating. Thus, UK may serve some potential - even though the interest in health by the British majority is low. Fourthly, as for the Southern European countries, there are enough people but not enough money. Besides that, the strong Southern European dining culture, which places home cooked and eating together on a near holy level, would not celebrate the fast and simple solution that Ambro provides.

Even if some markets would prove potential, these findings further strengthens Ambro's number one choice of expanding its business towards the US. Stay posted and stay informed !

Sources:

Agriculture and Agri-Food Canada: http://www.gov.mb.ca/agriculture/statistics/agri-food/germany_health_environment_en.pdf
A Taste for Organic Food http://ourworld.unu.edu/en/a-taste-for-organic-food
Eurostat: GDP per capita in PPS: http://www.euromonitor.com/european-marketing-data-and-statistics-2014/book
Foodnavigator: http://www.foodnavigator.com/Financial-Industry/Euromonitor-highlights-Nordic-food-trends
Goethe Institutue: http://www.goethe.de/ges/mol/tre/glb/en2907049.htm
Kings Fund department of health: http://www.kingsfund.org.uk/time-to-think-differently/trends/healthy-behaviours
Public health England: http://www.noo.org.uk/NOO_about_obesity/trends
US Census Bureau http://www.census.gov/population/international/data/countryrank/rank.php
Yahoo Shine: http://shine.yahoo.com/healthy-living/the-new-nordic-diet-the-next-big-weight-loss-trend-2607925.html

Internationalization: Market to enter

Ambro Group is definitely facing an interesting task. It is not stepping into an existing market but creating a totally new market – as no direct competitors exist. The product itself serves a clear niche market - 
Ambro's aim is to reach out to around 1-2% of the total available consumers. These market prospects are usually not enough to gain sustainable profitability. For example, in Finland, 1-2% of the population equals around 60 000 potential customers. Thus, Ambro needs to find a large enough market. Also, the market needs to be accessible as well as profitable.

US: Country of choice

According to Ambro's founders, their priority market choice for the launch of the product is the US. We decided to take a closer look at this potential market. Firstly, the market size is large enough; 1-2% of the American population (317 million) already equals 3000000-6000000 people - 63x the amount of potential Finnish consumers (US and World population clock). Also, there are multiple trends that would support the choice of the American market. These are:

• Soylent - the product behind the idea of Ambro - has reached a lot of attention in the US
• Healthy food substitute / supplement products are increasing their popularity in the US all the time
• Organic food consumption is increasing in the US; 81% of people purchase organic foods sometimes as the concern for chemicals in food is growing
• Organic food market is forecasted to grow at the CAGR 14% during 2013-2018
• Consumer distaste for artificial ingredients is growing in the US
• Americans are more likely to order food online 
• Americans are more likely to be curious of new trends in the nutrition area
• Americans have an increased trend towards simple food solutions
• Americans are shying away from food containing gluten
• Americans have relatively high purchasing power  (2012 index 149 compared to Euro area 108)
• Single language for a relatively large area

Thus, it can be derived that secondly, the US market is also profitable, since consumers have purchasing power and a need for an organic product can be identified. There are no similar products in the market, but similar kinds of products exists (we'll discuss the competitive environment in the later posts). Thirdly, the US market is accessible; there is the correct infrastructure for Ambro (internet purchasing for food), and consumers are open for such products (government regulations will be looked upon in the later posts).

Therefore, we agree with Ambro's founders that the US is the best market for them to enter at the time of their launch. However, the whole of US would not be a relevant market; the extremely busy people interested in healthy lifestyle often live in large cities, and thus Ambro should focus on them. The western states are the most prominent markets for organic foods, but on the other hand, Ambro is not only an organic food - but a fast meal substitute as well. 

Other possible markets?

Instead of being content with the US market right away, we wanted to take a look at other possible markets as well. Germany and Northern European countries could be considered as well. However, Germany pales in comparison to the pure quantity of inhabitants to the US. Southern Europe is out of question though; too high of a cultural hurdle exists in that area, as the dinner and rich food culture is too predominant. Food substitutes are not likely to succeed. A detailed analysis of the other international entry possibilities for Ambro will continue in one of our next posts.  Also stay tuned for our plans for distributing Ambro through the major US cities. Besides that, we might shed some light on our secrets of getting funds. USA, Ambro is coming for you!To be continued!!

Sources:
Consumer Trends: Online Grocery Shopping http://www.foodmanufacturing.com/news/2013/02/consumer-trends-online-grocery-shopping
Eurostat: GDP per capita in PPS: http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00114
Euromonitor: Meal Replacement in the US http://www.euromonitor.com/meal-replacement-in-the-us/report
Food Additives. The U.S. Market http://www.marketresearch.com/Packaged-Facts-v768/Food-Additives-7815259/
Gluten-free 2.0: Where is the gluten-free trend going next? http://www.foodnavigator-usa.com/Markets/Gluten-free-2.0-Where-is-the-gluten-free-trend-going-next
Key Consumer trends in the $28bn US supplement business http://www.nutraingredients-usa.com/Markets/Key-consumer-trends-in-the-28bn-US-supplement-business
US and World Population Clock: http://www.census.gov/popclock/
United States Organic Food Market Forecast & Opportunities, 2018 http://www.marketresearch.com/TechSci-Research-v3895/United-States-Organic-Food-Forecast-7900026/

Segmenting, Targeting, Positioning – part 2

Ambro’s Customers

Let us take a closer look at Ambro’s customers. In our previous post we targeted them at 20-40 year old consumers. These generations are often tagged as generation X (age 35-55) and generation Y (age 15-35). Even though based solely on age, these groups sometimes have some distinct characteristics:

• Generation X (1960-1980):
  The generation X'ers usually possess more purchasing power due to their longer time in working life - and thus Ambro is interested in them. Generation X’ers are active community members but often tend to spend their money on safe investments, such as a house or on their families. The latter sounds a little bit less attractive for Ambro, since buying the product requires "taking risk" - buying something totally new. 
• Generation Y (1980-2000):
  By and large, generation Y people are characterized by a positive attitude towards change. The older end of the generation may be living the busiest time of their life: studies, stepping into the working life and young children. Many of this generation like to stay connected 24/7 through their social networks. For Ambro, it is good to notice that this generation may better fit the products’ brand image of offering a new, easy experience for eating food. (Cui et al., 2003)

Can we tell more about Ambro’s customers? Can we identify any more target groups? Because Ambro does not contain enough proteins - merely vitamins - top sporters are not a target segment. But, today we brainstormed a bit and came up with the following possible segments:

1. Single people, interested in health, who live alone and would prefer the easy alternative for a breakfast or when they are sick. Ambro could be even more convenient for them if was sold in ready-mixed packages. However, this may not be possible due to high sending costs (distribution channel discussed later) and the fact that the product contains no preservatives.
   
2. (private) Hospitals who might value the convenience of these nutritious ready-made meals, especially for patients who are only allowed to consume liquid food.

Upon closer consideration however, we think that Ambro might be too expensive for hospitals, and also not tasty or nice enough for regular patients. Next to the yoga segment that was previously mentioned by Ambro itself, our first proposal of single people might be interesting too. But then again, the this segment is very broad and therefore not as easy to reach as the (a) extremely busy people with interest in health or (b)Fitness and Yoga enthusiasts.  

So, as we said before, we believe it is the best for Ambro to focus on only one segment in the beginning.  We believe that the segment of high-earning, time-poor and extremely busy - but young - consumers would be strategically most important sector. Due to the vast size of the US working population (+/- 140 million of which 44 million in management positions) we believe the target market, even though a niche one, to be large enough. Targeting at higher income is also better suited to the premium status of Ambro since the consumers are less price sensitive (Jones et al, 1994). 

Other reasons for this segment to be strategically the most important are that they (a) are likely to be easily reached because of living/working in the large cities, (b) are likely to have more purchasing power than the fitness and yoga enthusiasts, and (c) have multiple incentives for buying the product - lacking time and needing fast meals while being perfectionists also regarding health. 

To summarize:

•  Segmenting:   Achievers and Innovators
• Targeting:       20-35 year old professionals with academic education, extremely busy (working)      lives, interested in healthy eating, and who can be segmented as achievers.
• Positioning:    Premium, healthy, easy and quick meal substitute.

However, if Ambro wishes to target two segments at once, they should consider a push-and-pull strategy. This means trying to find overlapping marketing tactics and activities which would suit both the target segment we have chosen and the Fitness & yoga enthusiasts. With this strategy, they would push their marketing activities towards the segment of extremely busy people interested in healthy eating, and at the same time pull the segment of fitness & yoga enthusiasts along. However, this requires thoroughly thought marketing tactics in order to reach both segments.

As discussed earlier, Ambro is a new product with no direct competitors. It stands out from the differently targeted Soylent through its focus on organic ingredients, and because Ambro is not meant to substitute every single meal.

Sources

Wright, R. (2006). Consumer Behaviour, Thomson Learning: London.

Jones, E., Chern, W.S. & Mustiful, B.K. (1994). Are Lower-Income Shppers as Price Sensitive as Higher-Income Ones?: A Look at Breakfast Cereals. Journal of Food Distribution Research: 82-92.
Cui, Y., Trent, E.S., and Sullivan, G.N.M. (2003). Cause-related marketing: how generation Y responds. International Journal of Retail & Distribution Management, 31(6), 310-320. 

Segmenting, Targeting, Positioning – part 1

In order for a product or company to truly succeed it is important to closely target a specific part of the market. Being a startup, Ambro faces a specific challenge here. In this post we will try to define on which segment Ambro should focus its marketing powers.

First of all, we believe that Ambro should start with targeting only one segment at first – entering a new market, especially when only launching the product for the first time, may be rather difficult if two differing segments are targeted at once. Our interest lies in the United States (we’ll specify the reasons in the later posts). If we examine this market, we soon find that no similar product actually exists. The closest competitor to Ambro might be Soylent, which operates in the supplement food market (to be examined in the later posts). In the previous post, we found out that Ambro is inspired upon this product, and therefore it may be that FDA (US Food & Drug Administration) will classify it as a Dietary Supplement. However, the essence of Ambro and the reason for its existence is that it offers a replacement for food – therefore, Ambro aims at creating the market of organic food replacements.

VALS - tool for segmentation

In order to define segments for the US market we turn to VALS, a tool developed for segmenting US adults into eight distinct types—or mindsets—using a specific set of psychological traits and key demographics that drive consumer behavior. It uses both motivations and resources of the consumer in order to understand how he expresses himself in the marketplace.

Although VALS indentifies eight distinct types, we believe the following two to appeal most to the product image of Ambro:

• Innovators: Innovators are change leaders and are the most receptive to new ideas and technologies. Ambro is a new product that would enter a yet non-existent market. Therefore it is most likely that it will appeal highly to innovators. In its marketing communication Ambro should focus on communicating the innovativeness of the product.
• Achievers:  Because of their busy lives, Achievers are often interested in a variety of time-saving devices. Since Ambro promotes itself as a quick substitute for dinner during busy periods, we believe it appeals greatly to achievers as well. Achievers may prove to be the most durable target group since their lives will continue to be busy while innovators might turn their backs to the product after an (unsatisfactionary) early adaption. 

In our interview with Tapio Melgin he identified some other segmentation characteristics. Ambro wants to focus on 20-40 year old people with academic education, with purchasing power and who are interested in nutrition. This description still would fit the so-called Achievers. In order to make it more concrete, the best segment for Ambro to target would be:

• Men and women in extremely busy jobs, such as investment bankers or lawyers. These people often want to eat healthy as they tend to be perfectionists in all areas of life; Ambro would help them to eat well and save time.

According to Tapio, this segment indeed is their target segment. Another target segment that Ambro indentifies is: 

• Fitness and Yoga enthusiast women of 20-40 years. These women are often very interested in healthy eating. 

This segment is more fractioned, because the age as well as the education level of yoga practitioners varies greatly. Surely, a great lot of them might be interested in balanced and healthy eating next to a balanced and healthy body (e.g. superfood enthusiastics). However, this segment also includes those who don’t know much about nutrition initially (e.g. which vitamins are important to get). The segment might need some education but may prove highly potential. Still, we would advice Ambro though to only focus on it after a succesful initial launch of Ambro in the US.

The ultimate goal is for the users to become either daily or occasional users (using only a few times a week). Ambro Group does not aim at people living only of Ambro, as the founders are also fans of good dinners. Instead, “Ambro is for the times food needs to work around you”.

Ambro - the Product

“Ambro is a complete, healthy and premium meal powder that contains everything your body needs and saves your time.” (Startupsauna.com)

In our interview with Tapio on 21 November, we also found out more about the product itself: 

The idea of Ambro derived from another food substitute drink Soylent, which has become very well-known especially in the US. However, what differentiates Ambro from Soylent is that Ambro is organic and contains no food additives. 

Ambro

• is made of nature’s best ingredients, e.g. organic nuts, wild Finnish berries and raw coco 
• contains no preservatives, artificial sweeteners/colours/flavoring, added sugar, gmo-grown ingredients or trans fats
• is 90% organic
• is gluten-free
• fulfils the daily nutrition recommendations

Ambro is a complete nutrition drink powder, which gives you everything your body needs in two minutes. The product is very easy to use: one simply adds Ambro powder with a scoop, shakes or mixes it in a blender with water, juice or fruit, and the drink is ready. The taste can be described as “nuts, porridge, a bit grainy”. According to test customers, it is “better than protein drinks, and quite ok actually”. Also, Ambro is sold in 1080g packages. With one package, you are able to make 7,5 full meals or 15 breakfasts. An opened package will last for 2 months. At the moment, the international shipping prices are $79/ one package and $119 for two packages. The idea is to get prices down after finding local producers. 

Ambro has been developed with the best nutritional doctors, and in fact, its nutritional value exceeds that of a normal lunch. 

Who are Ambro’s customers?

At the moment Ambro is still in the testing phase. However, they currently have over 100 customers in USA, Europe and Russia. These customers are busy and ambitious professionals who value time and health, and who want a complete and convenient solution. Thus, Ambro’s customers use them mainly for two reasons:

• Time save; you are able to skip lunch
• Only healthy ingredients and mostly organic; you can feel good even though no time to eat properly

We’ll tell you more about Ambro’s market segmentation, targeting and positioning next time!

Ambro - the only organic and complete product in the market

The Story behind the Company

This week we started to research Ambro a bit more. We wanted to carry out a thorough internal analysis to help us identify the best way to position and market the company internationally. In order to carry out the analysis, we interviewed one of Ambro’s founders, Tapio Melgin. First, he told us about background of the company.

The Ambro Group

Ambro Group’s story began last spring when the founders took part in the Restaurant Day and realized the existing need. Today, there are multiple dietary supplements and food substitutes in the world, and more and more people want to eat well and use good sources of nutrition. However, the founders of Ambro started to wonder whether it was possible to make such a complete food substitute that contains only ingredients of very good nutritional value, has no additives or artificial flavours, is organic, and meets the nutritional recommendations.

The five founders, Arno Paula, Miika Perä, Mikko Ikola, Simo Suoheimo and Tapio Melgin, all interested in healthy eating, decided to try this out. They began developing a recipe, familiarized themselves with a Finnish importer of organic products, and started testing. Their aim was to make healthy eating as easy as possible – and that’s why they are “simplifying organic food”.

 “Everyone wants to eat healthy, but not everyone has the time and energy to do so in their busy lives. That’s why we created Ambro.” (Ambro’s pitch at the Slush startup fair on 13th November 2013)

The testing phase has been going on since summer, and multiple customers have taken part in this. Finally, the company was officially registered in October 2013. The official launch of the product will take place next year. Meanwhile, the group has taken part in the Startup Sauna program (the startup accelerator, 16 out of approximately 200 applicants were chosen). At the Startup Sauna, the chosen startups meet investors and other entrepreneurs, as well as people who are happy to help them in e.g. meeting important business people.

All of the founders have business background or otherwise good understanding of business, and therefore the members have decided not yet to define clear business roles; everyone is taking care of everything to some degree. In the product development phase, the group has also used external consultants such as food technologists, doctors and nutritional scientists.

Ambro Group's long-term goals are set high: they want to go international right away and want to reach the huge niche market of USA. 

Ambro Group's vision is to become the #1 premium nutrition solution provider.

Welcome to Ambro vs. the World!

Dear readers,

Welcome to Ambro vs. the World! In this blog, we will take you on a global expansion journey of the Finland-based start-up called Ambro. The project is a part of our studies at the "Global Marketing Management" course at Aalto University School of Business.

The destination of our journey will end with a marketing plan for Ambro's new market entry strategy. During the fall of 2013, we will share our thoughts about Ambro's potential for internationalization, where this should take place and how the marketing should be organized.

During the first step of our journey, let us briefly describe our initial ideas to you: 

Product: The product can be best described by its creators' words at www.theambro.com. They quote: 

'Ambro is the fastest and healthiest meal that includes everything your body needs. Measure and mix it with water in a blender or a shaker and your Ambro is ready to go. It's a perfect breakfast or meal. Ambro consists of high grade ingredients such as organic nuts, organic brown full-grain rice, wild berries and organic cocoa. Our protein comes from organic nuts and high quality whey protein guaranteeing an ideal amino acid profile.'

Company: Ambro, a Finnish start-up company, currently 5-heads strong, is operating in the Start-up Sauna. Find a complete company profile on their website (one team member has dropped off).

International experience: Ambro has no international experience yet, though the company team consists of internationally-oriented students. 

Target market: Potential target markets may include other Nordic countries as well as California in the USA. We are not yet sure which market should be the first one to enter, but we will be investigating these as well as other European markets during the fall. We believe that these markets have the most potential for such a health product, and these are easy for a Finnish company to enter due to little psychic distance between the cultures.

Why is there market potential? There are several reasons why we believe Ambro definitely has market potential:

1. Rise of healthy eating habits in the target markets (e.g. super foods)
2. People in the developed countries have less and less time for cooking or eating - need for fast & healthy food
3. Increasing obesity - need for health products
4. Concept internationally recognized

Our next blog post will introduce our team of experts tackling this challenge. Besides that, we will conduct an exclusive, in-dept interview with Tapio Melgin, one of Ambro's founders. Finally, you will get to know why we chose this start-up as our next endeavor.