The Vision
In today`s competitive business environment, it is very important for a company to ensure that it is implementing an effective and innovative marketing strategy so as to see to it that the business is able to cope up with the expectations. Increasing competition and changing needs of the business environment are the two main reasons why a firm should have a good plan (Armstrong et al. 2015).
This report will discuss the marketing plan of a soft drink company named Social and its marketing expansion plan for the Chinese market. The plan will include an environmental and internal analysis followed by the appropriate target market for the firm. The financial aspects of the plan have also been provided.
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Social is a soft drink retail brand based in the United Kingdom. With the increase in the health consciousness of the people, the market for health products has increased considerably (Babin and Zikmund 2015). For this purpose, Social has taken over a company which produces smoothies which is a yoghurt based drink with high nutritional value. Having attained success in the United Kingdom, the company now plans to expand its operations in China. The given report is addressed to the CEO of the company with a proposal to expand its operations in China.
The Vision
The vision of the organization is to expand its operations successfully around the globe
The mission statement
The missions are as follows:
- Provide a healthy product to its customers
- Expand its business in China
- Earn high revenues in China
Sales Objectives
China is one of the leading countries in a world with a high GDP rate. Hence, Social has chosen China as the global country it wants to expand its operations in (Baker and Saren 2016).
The sales objective of the company is as follows:
- Grab 40% of the health juice market during the first year (Gummerus 2013).
- Sell more than 100000 bottles in one month during the first year
Profit Objectives
As the company aims to sell more than 100000 bottles every month during the first year, the company aims to make a profit of 1 pound on each bottle.
Pricing Objectives
As there are many health drinks present in the market in China, Social has to be considerate about the pricing of the product. It needs to price its product accordingly, so that the consumers do not find the product very expensive.
Hence, the company, after analyzing the price of various health drinks and smoothies already sold in the market, the company has decided to keep the price of this smoothie anything above 27 Yuan’s to 30 Yuan’s (Coombes and Nicholson 2013).
This given price has been set because all other health drinks and smoothies in China have been priced accordingly.
Sales Objectives
Product Objectives
The product objectives of the company are to provide healthy and good quality products to the customers at affordable prices.
The products would be following all standards that need to be followed by the products in China.
The beverage market in China is the fastest growing markets in the food industry. The growth rate is above 11% and the industry manufactures around 65 tons of beverages.
The revenue rte of the given industry in China is more than 30%. One of the biggest challenges in China is that the loyalty towards a particular brand has been decreasing consistently (Martelo Landroguez, Barroso Castro and Cepeda-Carrión 2013). This is the reason why many Chinese companies are investing heavily in marketing strategies which aim at increasing brand loyalty.
Just like the trend in the United Kingdom, people in China also also started showing their preference towards health drinks, smoothies and herbal teas (Zhou and Wang 2014).
As the standard of living has improved in the country, the choice of beverage consumed has also changed considerably (Johnson, Christensen and Kagermann 2018). The people these days prefer a greater diversity in the products and the consumer priority has become the top most concern of the marketers and business holders.
Furthermore, the people have been concentrating on products that are pollution safe and free hence, the trend of using imported drinks and foods have been increasing considerably (McDonagh and Prothero 2014). People have also inclined towards better lifestyle and products with the nutritional value and protein components. Freshness and convenience also plays a great role in deciding the purchases.
China is among one of the most attractive locations around the globe and has grown up to become a strong power. The legal system of China has also been improved considerably and for this reason, many companies want to invest here. Any investor like social will want to look at the three given aspects in order to determine the attractiveness of the market. This includes:
- China’s growth potential together
- Size of the market
- The very low cost of labor
For the environmental analysis, the PEST Analysis has been give below:
The main challenges for businesses in China are:
- Differentiation of products
- Strengthening the core competencies in the businessdomain
- Attaining strategicobjectives
There are certain government regulations like presence of certain rules which all businesses have to abide by (Osterwalder et al. 2014). Political force is often described as the most unsettling force. However, recently the political condition of China has stabilized over the past few years and for this reason, the government wants to focus on the business prosperity. The government is recently focusing on e-commerce.
Profit Objectives
Over the last few years, the economy of China has experienced a growth in the GDP rate and to keep this thing at a high pace, the companies are given freedom to take economic decisions. The rate of savings has increased considerably. There has been high increase in skilled labor and education level, This has made the people ready to pay a high amount of prices for quality goods because the urban population`s income level has increased.
As the labor price of China is comparatively, low it will be a good opportunity for Social to invest in the given country.
However the points that needs to be considered in China re its high inflation rate and high property rates.
The demographics of the country change continuously. Presently China has an ageing population. This has a huge impact on the cultural values and social trends of the country. The other social factors which will have to be considered are the education, religion, emigration and the collectivist culture of the country. People are more concerned with healthy lifestyle as they are against the laid back lifestyle. Hence, the product would do considerably well in the given industry.
The social as well as cultural aspect of the country keeps changing as per the changing demographics, like the population growth as well as the age distribution. This greatly changes the social trends and values. The size of the family also depends on the purchasing behaviour of the people (Wilson et al. 2016).
The technology advancement in the given country is considerably high which will make it easier for the firm to set up production facilities out there. As internet connectivity is also very good, the company will be able to make use of the facility to advertise their products.
The industry analysis will be done using the Michael Porter`s Five Forces Analysis of the Chinese Beverage Industry
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Threat of new entry
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The Threat of new entrants is low because the industry has high regulations and higher investment costs.
There are many players present in the market, for which many companies would not get adequate share.
It will not be easy for the firms to match with the costs of the local industries due to high economies of scale.
The regulation of China is very rigorous.
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Threat of substitutes
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The threat of substitutes is very high for the given market because, there are various local companies looking out for that consumer market.
For Social, the market is bound to be competitive and profitability will be limited
They will be required to make use of effective marketing strategies to push through the competition (Kotler 2015).
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Bargaining power of the buyers
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The bargaining power of the buyers is very high.
This is because they have a wide variety of options
Bargaining power of the buyers is also high due to availability of more options for the different customers.
Hence, the customers need to be captured in a manner such that the company can seek their preference.
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Bargaining power of the suppliers
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As the customer power is very high, the supplier power is comparatively very low.
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Competitive rivalry
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The competition in the given industry is very high. This is because the beverage industry is a growing market and for that reason, many companies engage in this activity in order to ensure that they can have access to the maximum market (McDaniel and Gates 2013).
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The internal environmental analysis looks after the strengths of the business along with the threats and opportunities available in the industry.
Strengths, Weaknesses, Opportunities and Threats Analysis
Strengths
Social was a retailer in soft drinks in UK, who had acquired a smoothie based company to help it to enter into the health drink sector.
The strengths of the business are given as follows:
- The company has a good brand name in the UK Market
- The offerings made which is the Smoothie is a relatively healthy product and has the capability to gain the attention of the people
- The company has prior experience, which may help it to capture the market in China.
- The company has adequate funds which will help it to expand to the given market.
Weaknesses
In comparison to other brands which offer healthy products, Social is still a relatively new brand and thus, it does not have that capability to match with the capabilities of the other brands in China (Hair Jr and Lukas 2014).
Pricing Objectives
Opportunities
The opportunities for the health drink company are very attractive. As the demand for health drinks has increased considerably, for this reason, the company can see to it that it takes advantage of the increased demand, and invest considerably in the Chinese market (De Mooij 2013).
The size of the Chinese market can also be a motivating factor and a great opportunity for the company.
Threats
Social company is new in the given health drink segment and there are various health drink companies in China (Gummerus 2013). The local companies are a threat to Social smoothies.
To beat this, the company might have too decreased its price which may have an impact on its profitability.
Determination of the target market
The target market for the smoothie company, Social will be as follows:
- Health conscious individuals
- Children below the age of 15
- Young generation who want high nutritional demand
Demographic segmentation
In the given segmentation procedure, the company will be targeting both the genders as this product does not need to differentiate between them. It will also be targeting the children below the age of 15 as they are necessarily fond of such products (Gronroos 2016). Older generation has not been targeted because they generally do not prefer having drinks with milk and are more inclined towards herbal tea. In terms of income level middle and upper middle class people have been targeted.
Psychographic segmentation
In terms of the given form of segment, the company wants to target those individuals who have a preference for healthy products.
Geographical segmentation
The company has targeted the Chinese urban population.
Product
The product which the company is planning to introduce into the Chinese market is a smoothie with a unique taste and packaging (Czinkota. and Ronkainen 2013). The product will come in just one size with a packaging of 300 ml which will be enough to satisfy a single person.
The customers may achieve good health after consuming the product.
Place
The product will be made available in all the urban cities of China. The market size in these countries is huge and therefore, the company will be able to perform well in the given domain (Kiel 2014).
Promotion
The company will be promoting its products using the given mediums as follows:
Social Media Promotion
The company will be advertising its products on various Medias like WeChat and certain social media sites.
Advertisements on Newspapers
It will also be investing in print media on various newspapers (Hair Jr and Lukas 2014).
Product Objectives
Billboards
It will also use billboard advertising in various prime locations
Television
The company will also be using the television medium as a promotion technique.
Price
The price of the product will be taken to be anything above 26 Yuan’s to 30 Yuan’s. The company plans to implement a system of competitive pricing technique.
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Sales Forecast
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1
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2
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3
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Number of products to be sold in an year
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1200000
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1500000
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2025000
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Average price per ride in Singapore $
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27 Yuan’s
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30 Yuan’s
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32 Yuan’s
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Total Sales
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Yuan’s 3,2400,000.00
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Yuan’s 4500,000.00
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Yuan’s 64800,000.00
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Financial forecasts can be defined as the total amount of sales which a company generally predicts for its products. The given forecast is based on certain assumptions.
The assumptions are:
The market:
The given Chinese market will be increasing by 50 percent in the first year and 35 percent in the second year.
Overcoming barriers to sale:
The company plans to increase the price of the products in the second and third year due to increased costs of the company (Kim and Mauborgne 2014).As the price of the goods has been increasing , the company will be able to increase its sales even when consumer demand takes a toll.
Hence, the following can be stated:
- During the first year the customers will be willing to pay 27 Yuan’s for each smoothie and then if the company aims to sell 1200000 products which will bring about revenue of Yuan’s 32400000.
- During the second year, the market will expand by 50 percent and the company plan to sell around 1500000 products. For this reason, the price will be raised to 30 Yuan’s and sales will change accordingly.
- Lastly, during the third year, the product will be sold at a price of 32 Yuan’s getting a sales amount of 64800000 Yuan’s for the firm with an increase of 35% in the volume of sales.
Conclusion
Therefore, it can be stated that China is an attractive target market for the firm, the consumers in China are quite health conscious and for that reason, the smoothie can work well in the given market. As the product packaging and taste will be unique the customers may want to try it out once at least. The given marketing plan lays down the Marketing objectives as well as various analysis like external environment, internal environment and industrial analysis. The Marketing mix of the company has also been given along with the financial implications for the same.
References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Babin, B.J. and Zikmund, W.G., 2015. Exploring marketing research. Cengage Learning.
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Coombes, P.H. and Nicholson, J.D., 2013. Business models and their relationship with marketing: A systematic literature review. Industrial Marketing Management, 42(5), pp.656-664.
Czinkota, M.R. and Ronkainen, I.A., 2013. International marketing. Cengage Learning.
De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.
Gronroos, C., 2016. Service Management and Marketing: Managing the Service Profit Logic. John Wiley & Sons.
Gummerus, J., 2013. Value creation processes and value outcomes in marketing theory: strangers or siblings?. Marketing Theory, 13(1), pp.19-46.
Hair Jr, J.F. and Lukas, B., 2014. Marketing research (Vol. 2). McGraw-Hill Education Australia.
Hartley, R.F. and Claycomb, C., 2013. Marketing mistakes and successes. Wiley.
Johnson, M.W., Christensen, C.M. and Kagermann, H., 2018. Reinventing your Business Model. Harvard Business Review. (December), pp.51- 59.
Kiel, I.H., 2014. Entrepreneurial marketing.
Kim, W.C. and Mauborgne, R., 2014. Blue Ocean Strategy. Harvard Business Review. October, pp.76-84
Kotler, P., 2015. Framework for marketing management. Pearson Education India.
Martelo Landroguez, S., Barroso Castro, C. and Cepeda-Carrión, G., 2013. Developing an integrated vision of customer value. Journal of Services Marketing, 27(3), pp.234-244.
McDaniel, C. and Gates, R., 2013. Marketing research. Singapore.
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Osterwalder, A., Pigneur, Y., Bernarda, G. and Smith, A., 2014. Value proposition design: How to create products and services customers want. John Wiley & Sons.
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Zhou, L. and Wang, T., 2014. Social media: A new vehicle for city marketing in China. Cities, 37, pp.27-32.
