Place

Even though Mixit employs multiple distribution channels, its distribution strategy is still considered selective since Mixit avoids distributing its products via supermarket chains in order to preserve the exclusiveness and premium brand association. The utilised indirect distribution channels are small brick-and-mortar stores specialising in healthy nutrition, farmers' markets and direct distribution is provided via e-shop with in-house delivery via Czech post, PPL or Geis, company pick-up spots and pick-up spots of Zásilkovna according to customer preference. Opening of the company store had been considered, yet this idea had been rejected due to its doubtful profitability. (Mixit, 2021g;

Záluský, 2015)

32 Mixit currently supplies its products to more than 600 independent brick-and-mortar stores specialising in healthy nutrition throughout the Czech Republic, such as Sklizeno, Náš Grunt or Bio day, in order to make its products as accessible as possible yet preserve its premium positioning. (Mixit, 2021h) Since the farmers' markets have not been organised since the beginning of 2020 due to the currently applied restrictive measures, it was not possible to obtain current data which would be relevant for the analysis.

Moreover, customers can have their orders placed on the company e-shop delivered directly to their address via one of the mentioned providers of currier services. Based on the preference of the delivery provider, the price charged for delivery ranges from 49 to 59 CZK. Company pick-up spots are located in the majority of the big cities in the Czech Republic. Currently, there are 35 spots available to which customers can have their orders delivered for 19 CZK. (Mixit, 2021g, 2021h) In addition to company pick-up spots, there are more than 1 800 pick-up spots of Zásilkovna to which customers can have their orders delivered for 39 CZK. (Mixit, 2021h)

Furthermore, to enhance the accessibility of the products company operates more than 100 vending machines called Mixitomat, matching brand aesthetics as well as the communication style, located in offices, schools and hospitals. Mixitomats offer packages of single-portion sizes of the ten most sold, thus most favourite, Mixit products.

(Semerádová, 2018)

Source: Mixit - Mixitomat, automat plný dobrot od Mixit!, 2021i Figure 9 Mixit Vending Machine

33 4.2.3 Price

Mixit has adopted the premium pricing strategy since its market entry to reflect the premium quality of the final products as well as the ingredients, exclusivity of the product portfolio and technology used in production. The adapted strategy is reflected in the fact that, compared to the competitors in the premium breakfast muesli segment, the final price of the Mixit mixes is ca. 30 – 40 % higher. Even though consumers were reluctant to pay the premium price shortly after the market entry, after the educational campaign regarding the utilised lyophilisation technique and its benefits consumers understood the reasoning behind the higher price and became willing to pay for the extra benefits. (Záluský, 2015) Moreover, the prices listed on company e-shop do not differ from the prices charged by in the distributors' brick-and-mortar stores, yet if they differ, the difference is just marginal, implying that the distribution channels are of equal importance for Mixit.

Due to the products' long shelf life, Mixit does not provide any extensive discounts.

However, the company provides seasonal bulk discounts of up to 10 % on e-shop to promote customer retention and seasonal sales. Moreover, the company favours members of the loyalty program and provides them with discounts of up to 20 % and free samples of product novelties. (Mixit, 2021f)

4.2.4 Communication

In its multiple-step marketing communication, Mixit employs a combination of push and pull strategies in order to create and stimulate demand for its products, inform and informally educate consumers. As the majority of the brands with premium positioning, Mixit avoids advertising in TV, radio and newspapers as well as a regular outdoor advertisement and the most heavily used communication channels are therefore company social media accounts on Facebook, Instagram, YouTube, Twitter and Pinterest, along with the company web and in-store promotion.

The employed communication style is consistent throughout all media channels and features the informal and ordinary language of the general public with the appropriate funny puns and references to pop culture and iconic movies or songs. Moreover, the language of the communication is made exceptional by using newly created coinages referring to mixing, muesli or the bird mascot of Mixit - Mixiťák.

34 Figure 10 Sample of Mixit s.r.o. Communication Style

Source: Mixit - Dárky, 2021e

Visual aspects of the communication preserve the cleanness and readability of the communicated message and the usage of corporate colours, namely yellow, orange and brown shades. Overall aesthetics of the brand visuals as well as packaging is somewhat retro yet visually appealing and likeable. In-store promotion used to make the Mixit brand more visible in the distributors' stores, e.g. shelf decorations and stands, is in line with company aesthetics. Moreover, the company adopted a rather emotional approach in message creation and communication via all channels is customer-oriented and encourages community building around the brand and directs customers to the company web.

Sources: Mixit - MIXIT.cz - NAMÍCHEJ SI SVOJE MÜSLI, 2018; MŮJ MIX - Můj Mix, n.d.

Company web serves as the primary touch point for customers and combines features of an informative website and e-shop. The informative section provides information regarding company background and loyalty program, further Q&A section, variety of charity activities, such as “Na dobroty pro lékaře”, which are a part of corporate PR and company blog with recipes, customer stories, creative ideas and company up-dates. The e-shop section comprises a mixing module and offer of products and vouchers, further provides information regarding product ingredients, accessibility of the products and proximity of pick-up spots. (Mixit, 2021j)

reference to the iconic scene from movie Pelíšky

Figure 11 In-store Promotion

35 Mixit is considerably active on all of its company social media accounts and highly responsive to all positive as well as negative customers' comments and requests promoting the strong sense of community and image of a love brand. Firstly, the company Facebook account MIXIT.cz - NAMÍCHEJ SI SVOJE MÜSLI was on January 10, 2021, followed by more than 180 000 followers, and the company has been posting special offers, details about upcoming launches and product upgrades regularly multiple times per week.

Moreover, Mixit uses this account to promote customer loyalty and engagement by means of regular competitions for products or discounts. (Mixit, 2021k) Secondly, the company Instagram account @mix.it was followed by more than 54 500 followers on January 10, 2021, and comprised ca. 600 posts. Similarly to Facebook, the company is active on this platform and shares similar posts multiple times per week. However, instead of organizing competitions for customers on the Instagram account company rather re-posts the followers' posts featuring Mixit products contributing to the brand community building.

(Mixit, 2021l) Thirdly, the company shared 67 short advertising spots, product introductions, unboxing videos, short interviews and informative, educational videos from production on its YouTube channel. (Mixit, 2020a) Fourthly, the company Twitter account MIXIT.cz Müsli is followed by 965 followers on January 10, 2021. However, the company is active on this profile just occasionally, and its posts are highly informative regarding the milestones accomplished by the company. (Mixit, 2020b) Lastly, the company Pinterest account is followed by less than 100 followers on January 10, 2021, and contains mostly recipes featuring Mixit products, DIY ideas and interesting facts regarding Mixit. (Mixit, 2021m)

Last but not least, the subscription program called Mixit Klub presents a significant part of Mixit communication. The subscription program retains immense popularity targeting over 300 000 regular loyal customers since its introduction in 2018. (Mixit, 2021c; Zboží a Prodej, 2018) By choosing from a variety of subscription offers, customers receive benefits ranging from regular in-house delivery of exclusive product packages, access to novelties and samples not available for the general public, additional discounts to free delivery for extra orders. (Mixit, 2021f)

4.3 VRIO Analysis of Mixit s.r.o.

Prior to designing a successful market entry strategy for the German market, it is inevitable to perform an internal analysis of the Mixit based on the provided analysis of the marketing mix and company background, which should determine the sustainable

36 competitive advantage of Mixit in the domestic Czech market. Furthermore, the relevance of the determined sustainable competitive advantage for the target German market should be analysed and consequently either appropriately utilised in the market entry strategy design without any further optimization or the company's resources, processes, and communication need to be optimized accordingly in order to improve the competitiveness of Mixit on the German market.

The premise of VRIO analysis is to identify valuable, rare, difficult to imitate and effectively organized resources, or their combination, as the source of the company's sustainable competitive advantage. Owing to the findings of the analysis of the Mixit and its marketing mix in the previous subchapters, multiple key resources were identified among the human, material and non-material resources. These key resources were further evaluated in Table 1 for their implications for sustainable competitiveness.

Table 1 VRIO Analysis of Mixit s.r.o.

Resources Valuable Rare Difficult

to imitate Organized Competitive implication

37 Legend: CP = Competitive parity, TCA = Temporary competitive advantage, UCA =

Unused competitive advantage, SCA = Sustainable competitive advantage

Source: Own processing based on Mirkovic - VRIO Framework: Creating Sustained Competitive Advantage, 2018

The results of VRIO analysis confirmed that the core sustainable competitive advantage of Mixit resides in its know-how of lyophilisation technique effectively utilised by the skilled operators of the custom-made machinery in the production of final products of the certified premium quality. The effect of the mentioned sustainable competitive advantage is temporarily promoted as Mixit evinces features of a love brand. Therefore, the company should advisably utilise this temporary competitive advantage in designing its market entry and marketing strategies and develop it further to a sustainable competitive advantage if possible.

38

5 Analysis of the German Market

In order to accomplish the main objective of this thesis, to design the appropriate market entry strategy for the Mixit s.r.o. to Germany, it is inevitable to conduct a profound analysis of the target market and forces influencing the business conditions within the target muesli and grain-based breakfast products industry. Therefore, the results of the external analyses utilising the PESTEL framework and Porter's model of five forces are summarized in the SWOT matrix in order to obtain actionable insights for the strategy proposition.

5.1 PESTEL Analysis

The PESTEL framework was employed, based on the analysis of the secondary sources, to identify the factors determining the business conditions and thereby directly to impact the company’s performance. Moreover, the ETOP technique was implemented for the more precise distinction of either the favourable or adverse impact of these factors. In particular, the ETOP technique facilitates defining if the identified factors create business opportunities or impose threats emerging from the presence of a company on the German market. Additionally, the considered factors were rated according to the authors’ subjective evaluation of the findings of the secondary research for the urgency of their impact on the performance and business operations of a muesli producing company using a scale from 1 to 5 to distinguish the factors with the most noticeable impact. The findings of PESTEL analysis will be further utilised in the proposition of the marketing strategy for Mixit entering the German market, sizing the market opportunities and mitigating its threats.

5.1.1 Political Factors

Even though the overall political stability in Germany has slightly decreased, it can still be considered a stable economy since the trend of slightly decreasing stability arouses from the increasing strain within the ruling coalition, upcoming parliament elections in September 2021, the uncertain impact of Brexit and the negative externality of the worldwide uncertainty caused by the COVID-19 pandemic. Consequently, the effectiveness of the government decreased proportionately. (Ellyatt, 2019; The World Bank, 2021a)

Notwithstanding the slightly impaired stability and effectiveness, the perceived quality of the formulation and implementation of the regulation encouraging the development of the private sector remain significantly high and thus promotes a high level of business

39 freedom. (Deloitte Development LLC, 2016; The Heritage Foundation, 2021; The World Bank, 2021a) Furthermore, membership in the European Union implies the applicability of the Small Business Act and Competitiveness of Enterprises and small and medium-sized enterprises program providing small and medium-sized enterprises with resources to improve their competitiveness. (WTO, 2019) Moreover, Germany ranks as the 9^th least corrupted country worldwide and the trend of decreasing perceived corruption is expected to continue. (Transparency International, 2021) Even though the imposed corporate income tax rate of 15 % is considerably lower than the EU average, which is 20.71 %, the overall corporate tax burden can reach up to 33 %. (KPMG, 2020; PwC, 2021) Overall the raking A3 assessing country risk implies that the market conditions are favourable, yet it is advisable to take relevant precautions to mitigate the risks. (Coface, 2021)

Table 2 Political Factors

Political factors Impact

Urgency positive neutral negative

Government stability ✔ 4

Brexit ✔ 3

Support for small and middle-sized

businesses ✔ 5

Corruption investigation ✔ 2

Corporate taxation ✔ 5

Country risk ✔ 3

Source: Own processing based on Keřkovský and Vykypěl - Strategické řízení: teorie pro praxi, 2006

Considering Mixit, the political factors with the most prominent positive impact on the business conduct within the target industry are the support for small and middle-sized businesses, which company could apply for in order to gain capital for the market entry, along with the governmental stability mildly complemented by low country risk. On the contrary, the high corporate taxation might have a strongly adverse impact on the company's profitability on the German market, compared to its previous performance on the already entered markets. The neutral impact of Brexit results from its ambiguous implications for doing business and the related need for the reestablishment of the structure

40 of the European institutions as this reestablishment might strengthen the position of Germany within the union.

5.1.2 Economic Factors

Even though Germany ranks among the biggest economies in the world, it has faced a significant slowdown in economic growth since 2018, closely avoiding a recession in the following year. (Ellyatt, 2019) Moreover, the adverse impact of the COVID-19 pandemic and the related restrictive measures deepened the economic recession resulting in the 4.9 % decline in the real GDP, comparable to the decline caused by the Great economic recession in 2008. (International Monetary Fund, 2021) Nonetheless, the ifo Business Climate Index, indicating the economic developments, has been steadily growing since the beginning of 2021, implying that the German economy will recover and the forecasted 3.5 % growth of real GDP would be achievable. (Coface, 2021; ifo Institute, 2021)

Moreover, the inflation rate is expected to remain subdued due to the low energy prices and decreased VAT tax, not exceeding 1.5 % in the upcoming years, as well as the structural unemployment, which has been gradually decreasing over the last decade prior to the outbreak of the COVID-19 pandemic and currently reaching 4.3 %. (Banco Santander, S.A, 2020; The World Bank Group, 2021) Furthermore, the continuously growing disposable income along with the significantly low interest rates stimulate domestic consumption and promote the mentioned recovery of the economy and GDP growth. (European Central Bank, 2021; The World Bank, 2021b) With a score of 79.7 in the Ease of Doing Business ranking, Germany ranks among the best countries for doing business and continuously improves its score; hence its business climate has been awarded A1 rank by Coface, implying that it is of superior quality and reliability. (Coface, 2021;

The World Bank, 2021c)

41 Table 3 Economic Factors

Economic factors Impact

Urgency positive neutral negative

Economic growth ✔ 4

Low unemployment rate ✔ 4

Disposable income growth ✔ 5

Inflation rate ✔ 2

Energy prices ✔ 3

Ease of doing business ✔ 4

Market conditions for doing business ✔ 4

Domestic consumption ✔ 5

Source: Own processing based on Keřkovský and Vykypěl - Strategické řízení: teorie pro praxi, 2006

Despite the recent stagnation of the economic growth, the disposable income growth promotes domestic consumption creating the demand for premium products implying the profitability potential for Mixit. Moreover, the significant ease of doing business complemented by the favourable values of macroeconomic indicators encourages companies to enter the market despite the considerably high risk of lacking eligible workers due to the low unemployment and increase in the related costs for their hunting and retention.

5.1.3 Socio-cultural Factors

The current population of Germany accounts for ca. 83.1 million inhabitants with the equal representation of both sexes, yet the population growth rate has been decreasing, implying its stagnation and potential ageing in the upcoming years. (Statistisches Bumdesamt, 2021a) The slight population increase, observed continuously since 2010, was elicited predominantly by the net immigration, hence inhabitants of migrant background counts for ca. 26 % of the total. Consequently, the most numerous national minorities residing in Germany, and thus infusing their cultural specifics into the national culture, are Turkish, Polish, Russian, Kazakh and Romanian. (Statistisches Bumdesamt, 2021b, 2020a, 2020b) The university educational attainment has been continuously increasing, with 33.5

% of the population having obtained a university degree in 2019. (Statistisches

42 Bumdesamt, 2020c) Hence, ca. 87 % of the population in the productive age have finished upper secondary or higher education and supply the German market with a highly skilled workforce. Similarly, the average annual wage is increasing and is above the OECD average, thus classifying Germany as a high-income country with improving standards of living and increasing expenditures on food. Thus, the changing consumption patterns imply that the higher income, the more quality, healthy and premium products consumers are buying. (Clark, 2021; Wilke, 2021) The overall development of the economy considerably supports human development as presented by its index value of 0.947, out of 1.0, and the superior score in the life satisfaction indicator. (OECD, n.d.; United Nations Development Programme, n.d.)

Furthermore, the analysis of the cultural factors determining consumer behaviour and preferences was based on the Hofstede 6-D model utilising a 0 to 100 point scale. The distinct feature of equality within the German population and the prominent presence of the middle class imply that Germany scores relatively low, 35 points, in the power distance dimension, and the organisation of institutions and public life is thoroughly democratic.

The considerably high score in the individualism dimension, 67 points, accounts for the Germans’ social independence from their surrounding and self-reliance. Moreover, the high score of 66 points in the masculinity dimension justifies the assertiveness and competitiveness, a rather high self-esteem, decisiveness, status demonstration, focus on performance and results, dedication to work and self-actualization observed in Germans.

The appreciation and request for providing details, which serve as a source of reassurance in the decision-making process, and heavy reliance on the expertise manifest the moderate tolerance towards uncertainty and ambiguity supported by the moderately high score of 65 points in the uncertainty avoidance dimension. The score of 83 points in the long-term orientation dimension demonstrates the predominantly pragmatic approach to life and related ease of adaptation to changing conditions, innovativeness and thriftiness, projected in the German economy through the swift implementation of the innovations increasing effectiveness and economical allocation of resources. Scoring 40 points in the indulgence dimension implies that German culture is slightly restraining. Hence, private matters are strictly separated from the working ones and emotions are expected to be suppressed by social norms. Therefore, Germans might give an impression of being rather detached and

The appreciation and request for providing details, which serve as a source of reassurance in the decision-making process, and heavy reliance on the expertise manifest the moderate tolerance towards uncertainty and ambiguity supported by the moderately high score of 65 points in the uncertainty avoidance dimension. The score of 83 points in the long-term orientation dimension demonstrates the predominantly pragmatic approach to life and related ease of adaptation to changing conditions, innovativeness and thriftiness, projected in the German economy through the swift implementation of the innovations increasing effectiveness and economical allocation of resources. Scoring 40 points in the indulgence dimension implies that German culture is slightly restraining. Hence, private matters are strictly separated from the working ones and emotions are expected to be suppressed by social norms. Therefore, Germans might give an impression of being rather detached and

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