marketing in china master kong yu wai sum (monica) 11340690110 yu wai sum (monica) 11340690110 tang...
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Marketing in China
Master KongYu Wai Sum (Monica)11340690110
Tang Lok Yiu (Yoyo)11340690109
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ContentOverview of Beverage
industry and Non-alcohol business
trend in the world
Overview of Beverage industry and Non-alcohol business
trend in the China
Introduction of Master Kong
Competitors Master Kong’s Business model
Brand and product
What are the values Master Kong created
for consumers?
What makes Master Kong’s consumer happy and loyal
Consumer market
SWOT analysis
Challenges in China
Next Step in China
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Overview of Beverage industry and Non-alcohol business trend
in the world
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• People’s living pace is faster • People are more stressful• Development of economy leads to a better
living standard People demand healthier functional drinks
Overview of Beverage industry and Non-alcohol business trend in the
world
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• Functional drinks grow globally in a fast rate• Eg. Sport drinks, Energy drinks, calcium boost drinks,
• Carbonated drinks market saturated Expected decline in carbonated products
Overview of Beverage industry and Non-alcohol business trend in the
world
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Overview of Beverage industry and Non-alcohol business trend
in China
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Overview of Beverage industry and Non-alcohol business trend in China
Major categories of beverages in China
Carbonated Drinks Eg. Coca-Cola
Fruit and Vegetable Juice
Eg. Huiyuan Juice
Tea Drinks
Eg. Master Kong Ice Tea
Bottled Water
Eg. Nongfu Spring
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Overview of beverage market and Non-alcohol business trend in China
• Main Direction : Health drinks • “Eleventh Five-Year Plan” : focused on
adjusting the beverage product structure, and reduced the proportion of carbonated beverages
• Result ?
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• New categories of beverage entering the market (Functional drink)Eg. Sports drinks, energy drinks, vegetable protein drinks• China market : Continue to grow due to
demographic changes
Overview of Beverage industry and Non-alcohol business trend in China
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What is Master Kong?
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• Master Kong (Chinese :康師傅 )• Taiwanese enterprise in China• Founded in 1991 • Headquarters in Tianjin, China• Second most valued brand in China (TNS,2011)
Who I am?
(Logo of Master Kong)
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• Specialize in the production and distribution of :
Who I am?
Instant Noodles Beverages Instant Food Products
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The Group is the market leader in instant noodles and ready-to-drink (RTD) teas
Who I am?
56%16%
28%
Instant Noodle Market Share In China 2012, By Sales Value
Master KongUni-President Chinaothers
48%
20%
32%
Ready-to-drink Tea Market Share in China 2012, By Sales Value
Master KongUni-president ChinaOthers
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Master Kong’s Competitors
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• Local Competitors• Uni-President- Together with Master Kong, the two brands’ market share in the first and second-tier cities are almost 80% - Uni-president’s fruit juice enjoyed a great popularity in the market
Competitors
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Competitors
• Wong Lo Kat -The largest producer in the herbal tea industry.- Made from pure Chinese herbal medicine
• Wahaha -The company produces more then 100 varieties of products including milk drinks, drinking water, carbonated drinks, fruit juice and tea.
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Competitors
• Multinational competitors• Coca Cola• Coca-Cola has enhanced its research in non-
carbonates and built a research unit dedicated to traditional-Chinese-medicine drinks in China.
• Nestle• Nestle continues to grow its business in China by
investing in its portfolio of local and global brands.
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Master Kong’s Business Model
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Business Model
• Vision Honest , Pragmatic, Innovative• Value Proposition To deliver delicious and safe food and beverages by an effective way • Target customer segments A wide range of customers
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• Partner network A broad distribution and production network Offers flexibility on supply chain and pricing
which enable Master Kong to respond to new products launch faster
• Cost structure Cost : Raw materials, Advertising, plants, operations
Business Model
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• Distribution Channel : Value delivery network Direct sales; Indirect sales Past: Producer single Wholesaler/city Retailers Customers
Recent: Producer Retailers Customers
Postmen
Business Model
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• Distribution channel
~ 500 sales offices + 100 warehouses Serving > 5,000 wholesalers + 73,000 direct retailers Contributed to the company’s rapid penetration in the smaller cities and its lead in market share
Business Model
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Brands and Products
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Brands and ProductsMarketing Mix (4Ps)
• Product• family branding Line of products are sold with the same brand name- Products gains recognition easily - One product can affect the overall brand
• Product life cycle- Master Kong beverages have existed in the market for a long
time – but still growth phase - Innovative – understand consumer needs and introduce new flavors
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Brands and ProductsMarketing Mix (4Ps)
• Product Mix Products
Beverages
RTD Teas
Iced red tea
Green tea
Flower tea
Oolong tea
Water
Mineral water
Natural water
Juice
Daily C
Apple juice
Pineapple juice
Gaujava juice
Mango juice
Carbanated Drinks
Pepsi soft drinks
Instant food
Instant noodles Cookies Muffins Puff Line
depth refers to
the number of
subcategories a
category has
width of product mix
length of product line
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Brands and ProductsMarketing Mix (4Ps)
• Price• Neutral Pricing - The prices are set by the
general market, with the prices just at competitors’ prices.
Yihaodian.com
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Brands and ProductsMarketing Mix (4Ps)
• Promotion• Advertising- Invite celebrities to be spokesperson- Design Special characters to attract attention- Penguins ( an image of cool )
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Brands and ProductsMarketing Mix (4Ps)
• Promotions• Public relations – Charity works, sponsorships
and events
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Brands and ProductsMarketing Mix (4Ps)
• Promotion• Sales promotion – free gifts, lucky draws,
discounts
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Brands and ProductsMarketing Mix (4Ps)
• Place • Intensive distribution - convenient for consumers to
access• Extensive distribution networks in first-tier cities
(Beijing, Guangzhou, Shanghai and Shenzen).
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What are the values Master Kong created for consumers?
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What value does Master Kong create for customers?
• Innovative products• The leading innovator in the industry in
terms of flavors, techniques and operational concepts.
• Transform the industry's "Made in China" image to be "Created in China".
E.g. Introduced the classic braised beef noodles to the market in the early 1990s. The flavor has long been a favorite with Chinese people.
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What value does Master Kong create for customers?
• Quality drinks • Ready-to-drink (RTD) Tea• Barley-flavored tea• Healthy ingredients, natural and unconventional taste• The release became an instant success.
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What value does Master Kong create for customers?
• Unique lifestyle• Tea drinking – Traditional Chinese culture• Ready-to-drink tea - skip the brewing process- Healthy, yet more convenience - Adapt the traditional tea culture to modern lifestyle - Popular among new generation
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How does Master Kong make its customers loyal and happy
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How does Master Kong make customer HAPPY and LOYAL?
• Special customer experience• Master Kong Iced Red Tea : - Young , Modern, Energetic image- Target customer : young generation - More open to new ideas • Master Kong Iced Red Tea has an official website • http://www.myicetea.com.cn/• Interact with young customer
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How does Master Kong make customer HAPPY and LOYAL?
• QR code , Funny Video, Fan meeting with stars• Not only a ordinary drink – More fun
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Master Kong’s Consumer Market
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• Master Kong’s Beverages :• Serve a wide consumer base spread across
geographies• Young adults and health conscious consumers
are targeted (16-35 year-old)
Master Kong’s consumer market
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• Characteristics affecting consumer behavior• Culture • Rising consumer awareness about the health
hazards of carbonated drinks- A shift towards RTD tea and juice. • Surge in the health conscious population (E.g.
Women )who prefer antioxidant property of RTD tea
Master Kong’s consumer market
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• Characteristics affecting consumer behavior• Economy• Increase in disposable income in China• Trigger the growth rate of RTD tea and Juice
market
Master Kong’s consumer market
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Master Kong’s consumer market
• Characteristics affecting consumer behavior - Product- Price- Package- Flavors
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SWOT Analysis
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SWOT overview
STRENGTHS-Innovative-Broad Production and Distribution network-Long history and Good reputation-Massive advertising and promotional campaign -Large market share
OPPORTUNITIES- Support from government policy- Advanced technology- Rising purchasing power of consumers-Huge potential market
WEAKNESSES- Damaged brand image- Lower penetration in rural and lower tier cities
THREATS-Fierce competition-Consumer’s taste is changing quickly-Cost of raw materials is rising
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Strengths • Innovative- The “New Taste for Traditional Drink” series were
well-received by consumers.• Broad Production and Distribution network- More accessible to consumers, larger flexibility• Long history and Good reputation• Massive advertising and promotional campaign • Large market share
SWOT analysis
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• Weakness• Damaged brand image- The Master Kong’s mineralized water incident- Internet rumors• Lower penetration in rural and lower tier cities
SWOT analysis
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SWOT analysisOpportunities- Support from government policy- Advanced technology : reduce cost- Rising purchasing power of consumers- Huge potential market : rural area, bottled water
market
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Threats-Keen competition : similar products -Consumer’s taste is changing quickly-Cost of raw materials is rising
SWOT analysis
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Challenges in China
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Challenges in China
• Facing the fierce competition in China, how can Master Kong maintain or increase it’s market share?
• How can Master Kong maintain their profit growth in the saturating market in first-tier cities?
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Next step in China
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Next step in China
• Kong-Pep partnership -Purchase Pepsi Cola’s mainland business - Form a “strategic alliance” to beat competitor,
Coca-Cola. -Both companies expand their soft drinks markets -Build a more diversified product profile
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• Expand it’s distribution network into the rural market
• The richest cities are nearing saturation• Expand to rural market - next wave of growth. • Current network : costly and inefficient to
distribute products to the hard-to-reach rural outlets
Next step in China