St. Gabriel's Library, Au
A Marketing Plan of Thai Confectionery in China
by Mr. Visarut Yuchuchaimongkol
A Final Report of the Three-Credit Course CE 6998 Project
Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Science in Computer and Engineering Management Assumption University
November 2003 Project Title A Marketing Plan of Thai Confectionery in China
Name Mr. Visarut Yuchuchaimongkol
Project Advisor Dr. Chamnong Jungthirapanich
Academic Year November 2003
The Graduate School of Assumption University has approved this final report of the three-credit course, CE 6998 PROJECT, submitted in partial fulfillment of the requirements for the degree of Master of Science in Computer and Engineering Management.
Approval Committee:
(Dr. Chamnong Jungthirapanich) (Prof.Dr. Srisakdi Charmonman) Dean and Advisor Chairman
(Assoc.Prof. Somchai Thayarnyong) CHE Representative
November 2003 ABSTRACT
This study analyses the market opportunities for Thai confectionery products to enter China. The study begins with the introduction of our business. Also the study will offer a literature review on marketing concept, Confectionery Industry review,
Information of Republic of China, Overview of Shanghai City and Confectionery
Industry review in China. The study identifies the problems and analyses product situation including background of products and also takes a closer look at the overall confectionery market situation in China, the consumption, manufacturing and distribution patterns and trends, the competitive landscape, and some of the existing opportunities in the market.
Then the study analyses market situation by using SWOT analysis to identify the opportunity points that China market will grow, the weak points for entering this market are lower prices and complication of consumer behaviors. The positioning of the product is high quality, and high price. The target group is Shanghai people who are age between 13-30 years. The study will cover main parts of marketing plan including
Product strategy which plan to design the products to suit consumers, Price Strategy will set the psychological pricing in order to compete with local companies, Distribution strategy will use intensive distribution channels to cover the market area, advertising strategy to make brand awareness of product, promotion strategy consumer and trade promotions to make trial use and increase sales volume, Publicity strategy will establish market events to create a good image, personnel selling strategy will assist distributor and customers to get our target and contingency plan will be set up to support master plan, The conclusion and recommendation will suggest that China market 1s complicated which we have to study and set plans before entering the market. ACKNOWLEDGEMENTS
The writer is indebted to the following people and organizations, without them, this project would not have been possible.
He wishes to express sincere gratitude to his advisor Dr. Chamnong
Jungthirapanich for the patience, guidance, and the generous portion of time that he gave and the constant encouragement that has led the writer from the project inception to the project completion. His technical advice and assistance have been excellent.
Grateful appreciation is extended to the Committee Members: Prof.Dr. Srisakdi
Charmonman, Assoc.Prof. Somchai Thayarnyong for their constructive comments and advice throughout the research.
Deepest appreciation is due to the writer's family for their inspiration and motivation to undertake this endeavor and have made the sacrifices required so that it could be successfully completed. Above all, he is forever grateful to his parents whose willingness to invest in his future has enabled the writer to achieve his educational goal.
11 TABLE OF CONTENTS
Chapter
ABSTRACT
ACKNOWLEDGEMENTS 11
LIST OF FIGURES vi-vii
LIST OF TABLES vm
I. INTRODUCTION 1
1.1 General 1
II. LITERATURE REVIEW 4
2.1 Marketing Concepts and Tools 4
2.2 Confectionery Industry Review 40
2.3 Information of Republic of China 45
2.4 Overview of Shanghai City 53
2.5 Confectionery Industry Review in China 62
III. PROBLEMS DEFINITION I PRODUCT SITUATION 67
3.1 Background of Products 67
3.2 General Statistics and Main Types of Confectionery in the Market 73
3.3 China Confectionery Import Estimate 75
3.4 Key Market drivers in the Confectionery Industry 78
3.5 Confectionery Consumption Trends 80
3.6 Distribution Channels for Confectionery product in China 82
3.7 Trends and Structural Pattern in the Confectionery Distribution System 85
3.8 Imported VS Local Confectionery 87
111 Chapter
IV. SWOT ANALYSIS I MARKET ANALYSIS 89
4.1 SWOT Analysis of Thai Sweet Company to China Market 89
4.2 Confectionery industry SWOT analysis in China Market 90
4.3 Position Strategy 92
4.4 Target Group 94
4.5 Competitive Analysis and Market Shares 95
V. MARKETINGPLAN 97
5.1 Product Strategies 97
5.2 Pricing Strategies 100
5.3 Distribution Strategies 101
5.4 Promotion Strategies 103
5.5 Advertising Strategies 106
5.6 Publicity Strategies 108
5.7 Personal Selling Strategies 109
5.8 Marketing Budget and Marketing Calendar 109
VI. EVALUATION OF MARKETING PLANS 111
6.1 Evaluation Plan 111
6.2 Contingency Plan 112
VII. CONCLUSIONS & RECOMMENDATIONS 121
7.1 Conclusions 121
7.2 Recommendations 122
7.3 Further Study for China Market 124
APPENDIX A COMPETITORS OF THAI SWEET CANDY 125
APPENDIX B MARKETING ACTIVITIES CALENDAR 127
IV Chapter
APPENDIX C PRODUCT LINES UNDER THAI SWEET CANDY 128
APPENDIX D TRADE EXHIBITION IN CHINA 134
BIBLIOGRAPHY 137
v LIST OF FIGURES
Figure Page
3.1 Wafer Products 69
3.2 Snack Products 69
3.3 Candy Products 70
3.4 Jelly Products 71
3.5 Chocolate Products 72
3.6 Market Share of the Top Five Countries Exporting Sugar
confectionery to China in 1997 77
3.7 Market Share of the Top Five Countries Exporting Chocolate
confectionery to China in 1997 78
3.8 Sales and Distribution Flowchart for Domestic Confectionery 87
4.1 Positioning Map 93
5.1 Sample of Labeling Application 99
5.2 Sales Promotion Chart 105
5.3 POP Display 106
6.1 Sample of Event Marketing in China 117
C.1 Content of Product Lists 128
C.2 Picture of Wafer and Snack Products 129
C.3 Candy Products 130
C.4 Candy & Chewy Products 131
C.5 Biscuit Stick, Bakery, Chocolate and Jelly Products 132
C.6 Water Jelly Products 133
D.1 Picture of Food Exhibition in Shanghai 134
Vl D.2 Picture of Grand Opening Day in Exhibition 134
D.3 Wedding Cake Competition 1 135
D.4 Wedding Cake Competition 2 135
D.5 Booth in the Exhibition 136
D.6 Chocolate Chinese Boat 136
Vll LIST OF TABLES
Table Page
2.1 Ten Steps to Disciplined Marketing Planning 5
2.2 Shanghai's Monthly Average Temperature and Precipitation 56
3.1 China Imports of Sugar Confectionery (non-chocolate) by Country of Origin 76
3.2 China Imports of Chocolate Confectionery by Country of Origin 77
3.3 Comparative Analysis oflmported VS. Local Confectionery 88
4.1 Top 6 Best-selling Non-chocolate Confectionery Brands in China for 1997 95
4.2 Top 10 Best-selling Chocolate Confectionery Brands in China for 1997 96
5.1 The Product Pricing 101
A. I The Players in the Chocolate Confectionery Industry 125
A.2 The Players in the Non-chocolate Sugar Confectionery Industry 126
B.1 Marketing Activities Calendar For First Year Enter 127
vm I. INTRODUCTION
1.1 General
Thai sweet Candy Co., ltd., is a leading Confectionery manufacturer and exporter
in Thailand. The company was established with almost 30 years of experience in the
Wafer, Biscuit Stick and Candy industry and is the public's number one choice in
Thailand. Their products are well distributed throughout Thailand, currently holding a
commanding market share. In addition, Thai Sweet Candy Co.,ltd has a significant volume of sales in the Asia-Pacific and the Middle East.
Given high experience, they offer an extensive range of high quality products and the Company will also be able to develop Private Label projects. Currently the
Company works under Private Label basis with a few Confectionery Giants from the
Middle East and Japan. Due to our capability to adapt our products to the market's needs we offer a marketer a wide variety of colors, flavors, presentations, information to
be printed etc. The overall picture of confectionery indicates a high competition.
Emphasis is made on product quality and conception of new products. Advertisement plays an important role on product launching promotion. Packaging makes the product
stand out and attracts consumers with its gift-like features suitable for different occasions.
At present, product expansion focuses on biscuit, wafer, snack, candy and jelly.
The Company invested in new machinery and in the import technology for its product
development, capacity increases and efficiency thus responsive to market expansion. In line with Thai sweet Candy's policy of continuous expansion, the Company keeps on thinking of new products to offer the consumer particularly in the premium class in order to expand our market shares in the middle and upper class.
1 After careful research and analysis "Sanghai" brand coated wafer of Malt flavor.
This flavor is in addition to the four flavors (Chocolate, vanilla, milk and strawberry)
we have for the well known wafer "Sanghai" New products are being developed every
now and then to add variety and cater to the consumers' diverse preferences and tastes.
The Company is determined to manufacture premium grade products both for the
domestic and international markets.
Thai Sweet Candy Co.,ltd will redouble its effort to improve its products and a their positioning on Thailand's domestic market in preparation for a campaign to
penetrate not only the Asian market but also European and American markets as well.
The Company has already succeeded in entering other South Est. Asian Markets.
Between 10-15% of its total output was exported in 1999. The Company has set a bigger export target for this year for its total production output. With the help of
dedicated management and staff, Thai Sweet Candy Co.,ltd will certainly achieve this goal.
Recently, Thai Sweet Candy Co.,ltd Company has a plan to expand the market into Republic of China. The Chinese confectionery market reached a value of $3.1 billion in 2001. It is one of the largest confectionery markets in the Asia-Pacific region, making up 25% of the regional market by revenue. Only the Japanese market is larger.
In volume terms, China makes an even greater contribution -39%- making it by far the largest market. Sugar confectionery forms the largest market sector, attracting 49% of the market revenue. Chocolate follows this although its share of the confectionery market will decline from 44% in 2001 to 42% in 2006. Therefore, the China market is very attractive marketing and it has also become a significant market in the future. For this reason, The Company would like to launch the products into this market.
2 This Project is conducted to find out the master plan to establish the products into
China Market and come up with the marketing plan related to it. The Plan will include the detailed activities of the year 2003 and a brief idea of what we plan in the next 5 years.
The primary information is obtained from interviewing Chinese consumers during visiting Food Exhibition in China in 2002. The secondary information is obtained from
Fundamental of Marketing (Stanton 1994) published in 1994, Marketing Management
Analysis, Planning, Implementation and Control (Kotler 2001), The 1-Day Marketing
Plan (Roman 1992) and also Internet Website.
The scopes of the marketing project cover Confectionery of Thai Sweet Candy
Co.,ltd in China only. The limitations of this project are time constraints and lack of information to support.
3 II. LITERATURE REVIEW
2.1 Marketing Concepts and Tools
The key to writing an effective marketing plan is disciplined marketing planning.
However, before defining disciplined marketing planning, it is necessary first to
describe what is a marketing plan. We define a marketing plan as an arranged structure to guide the process of determining the target market for the product or service,
detailing the target market's needs and wants, and then fulfilling these needs and wants
better than the competition. (Roman 1992)
Disciplined marketing planning has two major components. The first, marketing
background, includes the business review, commonly referred to as a situation analysis, and the problems and opportunities segment. The business review is a comprehensive
analysis of the marketplace and of the own organization broken down into sequentially ordered sections; the problem and opportunities segment is a summary of challenges emerging from the business review.
The second major component is the marketing plan itself, which is developed from the information gathered and analyzed in the marketing background section. The marketing plan is totally inclusive and can be prepared in one day if the marketing
background segment has been developed in a comprehensive manner. The marketing plan begins in sequential order with the sales objectives and ends with a budget and calendar of marketing activities necessary to realize the sales objectives. This
disciplined method also allows a marketer to build testing programs into the final marketing plan. Once the plan is prepared, it must be executed and then evaluated.
Although evaluation is the last step in the process, with it begins anew the whole
disciplined approach, because evaluation becomes a major part of the background
section in the preparation of next year's marketing plan. 4 Table 2.1. Ten Steps to Disciplined Marketing Planning.
Step One Business Review
Company and Product Review Distribution/Penetration
Target Market Analysis Pricing
Sales and Market Share Analysis Comparative Competitive Analysis
Product Awareness and Attributes Demand Analysis
Purchase Rates and Buying Habits
I Step Two Problems/Opportunities
I Step Three Sales Objectives
I Step Four Target Market
Step Five Marketing Objectives and Strategies
I Step Six Positioning Strategy
Step Seven Marketing Mix Implementation Tools
Product/Service Promotion
Branding Advertising Message
Packaging Advertising Media
Pricing Merchandising
Distribution Publicity
Personal Selling I Operations
Table 2.1. Ten Steps to Disciplined Marketing Planning. (Continued)
Step Eight Marketing Plan Budget and Calendar
5 I Step Nine Execution
I Step Ten Evaluation
Step One: Business Review
To develop the business review, it is important to realize that marketer may not have the resources or time to complete all portions. There will be portions that do not pertain to the business. It should develop as follows:
Step 1: Corporate Philosophy I Description of the Company and Products
Different companies are unique in the ways they do business, their historical backgrounds, and their organizational structures, all of which have some level of impact on the development of a marketing plan. It is important to briefly describe, up front, predetermined corporate objectives, pertinent company and product history, and current product information and organizational parameters. By considering the culture and aspirations of the organization before writing the marketing plan, a marketer stand a better chance of developing a plan that will be effectively implemented throughout the organization.
Sept 2: Review of the Consumer Target Market
Target market definition is the most important phase in preparing a business review. Effective marketing is impossible without a thorough understanding of the current and potential customer base. The better the customer is understood, the better the marketer is able to fulfill the customer's needs. The business review provides a format that sorts current and potential customers into segments. Segmenting allows customers to be grouped according to common demographic, product usage, and purchasing characteristics. This allows for the analysis of which customer group is
6 currently most profitable and which consumer group has the most potential for the
company. The end result of segmenting is that a company is able to focus its marketing resources against an ultimate target market that has common demographic and product usage characteristics, purchasing habits, and product or service needs. Instead of trying to be all things to all people, the company can direct its energies toward satisfying essentially one person as characterized by the target market segment or segments.
The business review further provides a format that describes the profile of the current category consumer as compared to the company's current customer. This allows the marketer to determine if the company's customer is different from the general product category consumer. The similarities and differences will be important when determining future marketing strategies. A company may find that its product is consumed by a far older population than the general product category's consumer. This important information can be used in the marketing plan to further target this older age segment or to develop plans to attract more of the younger, mainstream consumer.
Demographic and Lifestyle Factor
The marketer's traditional method of defining purchaser and user groups and
segmenting markets is by utilizing demographic factors. Demographics can be
determined for either individuals or household (the configuration of individuals making up a living unit). Marketers also use lifestyle factor or psycho graphics to help develop target marketers. Lifestyle descriptors help to define a customer segment in term of the
attitudes, interests, and activities of the consumer.
7 Product Usage
For some products, demographics aren't as important as why the product is purchased or how it is used. Many items purchasers with similar demographic purchase the product for different reasons. This offers the opportunity to segment consumers based on usage of the product. People who bake from scratch purchase baking soda; it is also purchased as a refrigerator deodorizer. Many of the purchasers of baking soda as a deodorizer do not bake on a regular basis and so do not purchase the product for baking.
Thus, usage of this product helps define customer segments, and knowledge of the customers'usage is critical for how this product would be marketed to each of the two customer groups.
Heavy Users
Most product categories have a group of heavy users-consumers who purchase or use the product at far greater rates than that of the average consumer. According to our definition, a category has a meaningful heavy users segment if approximately one-third or less of the consumers account for approximately two-thirds or more of the purchases.
A retail example of this can be found in the shoe business. One-third of the purchasers buy more than 63 percent of the shoes. The demographic description of the heavy user shoe purchaser is further defined as someone who purchases seven or more pairs of shoes per year. (The average person purchases fewer than three pairs per year) Heavy users are more important because they offer the potential of marketing to a smaller, more defined groups of people who account for the majority of purchases. If they do not have primary research that determines the percentage of purchases attributable to the heavy user, a marketer can make direction estimates by using Simmons Market
Research Bureau (SMRB) or other secondary sources. If nothing is available to a marketer, make the best estimate based on the knowledge of the market.
8 In summary, it is important to determine if there is a heavy user group in the product category. Then develop a demographic profile of the heavy user group to determine if it is similar to the customer profile.
Potential Primary and Secondary Target Markets.
Primary Target Market.
A primary market is the main consuming group. This group of consumers is the most important purchasers and users of the product and will be the mainstay of the business. In some cases, it is the heavy user. For other companies who are more specialist oriented goods and services.
Many times the purchaser of a product is different from the user. If this is true, a marketer needs to decide who has most influence over the actual purchase. If the wife does the grocery shopping, does the husband who drinks the beer request his brand preference, or does he drink what his wife buys him? In most cases, the individual who does the purchasing becomes the primary target market. However, when the purchaser primarily buys what the user requests, then the user receives primary attention.
The primary target market becomes the company's reason for being. A marketer is in business to determine the primary target market's wants and needs and to provide for those wants and needs better than the competition. This pertains to providing the product, service, shopping environment, distribution channel, and price structure that is required by the customer for purchase. The better the definition and description of the consumers in the primary target market, the better a marketer will be able to market to them.
Secondary Target Markets.
Secondary target markets are important because they provide additional sales to the company beyond that of the primary target market, as well as future sales to the
9 company. This group of people can also help to influence the usage rate and purchases of the primary target market. A secondary target market can be one of the following:
Influencers. Influencers can be either a primary or secondary target market, though in most situations they are a secondary target market. These are individuals who influence the purchase or usage decision of the primary target market. A good example of this is the influence children have on their parents in the purchase of many consumer goods, from toys to fast food meals.
A demographic category with a high concentration index. Often there is a distinct demographic category that accounts for a small percentage of the volume but contains a high concentration of purchasers. For example, 18 to 24 year olds may account for only
10 percent of the total product category purchases, but 50 percent of the 18 to 24 year olds may purchase the product. This could happen for two reasons: (1) the small size of the target market relative to other target market, or (2) smaller purchasing rates or purchases of more inexpensive product models.
Subsets of Purchasers or Users Who Make Up the Primary Target Markets.
As stated in the primary target market section, ideally the primary target market should be one unified profile of customers. This allows for a focusing of resources and message in the marketing effort. However, there are situations where the volume of any one-target market is not substantial enough to qualify it as a primary target market. In this case, the marketer is forced to develop a broader primary market profile to meet the primary target market criteria of accounting for approximately 50 percent that encompasses many unique subjects of users who have slightly different demographics, needs, wants, products usage, and purchasing behavior. These subsets should be delineated in greater detail in the secondary target market section.
10 St Gabriel's Library, Au
I 27 ltl I Step 3: Review of the Business-to-Business Target Market
Business-to business firms typically have far fewer potential customers than do consumer companies. In addition, each business-to-business customer usually generates larger sales than does the typical consumer customer. As with consumer target market, it is important to segment so a marketer can determine which type of business is most profitable and has the most potential for the company.
Target Market Segmentation and Standard Industrial Classification (SIC)
Categories.
One of the best ways to segment business is by utilizing Standard Industrial
Classification (SIC) codes. Or, use the same SIC methodology to segment by other functional classifications that pertain to the particular product category. Business are classified into ten different broad, two-digit SIC categories:
Agriculture/Forestry/Fishing, Mining, Manufacturing, Construction, Transportation/
Communication/PublicUtilities,Whole-saleTrade,Retails Trade, Finance/Insurance/Real
Estate, Services, and Public Administration. Within each two-digit SIC there is category
56, Apparel and Accessory Stores, and within category 56 there is 5611, Men's and
Boy's Clothing.
Base Segmenting
The first step in developing business-to-business target market segments is to break down the customer base by purchaser segment or SIC. Next, determine how many different business categories a marketer sells to. List the categories in which a marketer has the most customers or clients first, and then continue listing the categories in sequential order from most customers to least. Finally, determine the penetration of each category (percentage of the total category that a marketer can classify as a customer)
11 Step 4: Sales Analysis
Sales data can be analyzed in many different ways. Properly analyzed, the data can provide the marketer with a wealth of information. The key, however, is to break down total sales into actionable segments of information to gain a clear understanding of what is taking place within the company as compared to the industry or product category as a whole. Wherever possible use five-year trend data.
Step 5: Product Awareness and Product Attributes
We have documented in case after case that an increase in awareness of quality product leads to increases in purchase rates or, in the terminology of our agency, increased share of mind leads to increased share of purchases. Therefore, awareness of the product or service is an important barometer of its further success.
Product Awareness
Typically, awareness is measured through primary research on two levels, unaided and aided. Unaided awareness is generally considered a more accurate measure. It involves consumers recalling specific product names without any assistance. Aided awareness is the awareness generated by asking individuals which product they are familiar with after reading or reviewing with them a list of competing products.
Awareness measures allow the marketing manager to fine tune advertising message and media strategies. Some examples of how awareness is used to help formulate subsequent marketing strategies are the following: Low awareness levels signal the need for more aggressive or effective advertising and promotional plan.
Often, the primary problem is that the product has low awareness among consumers, not that the product necessarily needs a repositioning. This is especially true if the product has positive attribute ratings from current users and a high trial/repeat usage ratio.
12 A Marketer with high levels of awareness often do not need as much media weight to sustain existing sales levels as markets with low awareness. And it often requires less media weight to generate successful promotions in established markets with high awareness than in newer markets where a customer base is not yet established and a minimal number of potential consumers have heard of our product or company. As an example, markets in which a product has low awareness often require larger print ads than markets with higher awareness levels. Our experience has shown that small newspaper ads are more likely to be seen by current users, and it takes larger ads to attract the attention of infrequent users or individuals who are not of the product.
Market with falling awareness levels often indicate isolated market specific problems such as increased competitive activity. These problems may require an individual marketing plan tailored to the specific market situation along with investment spending over the short term to stabilize and increase awareness levels.
Product Attributes
Product attributes or benefits are derived from consumers' perceptions of the product. This step of the business review is critical to developing future marketing plans, for it allows the marketing manager to define the strengths and weaknesses of the company's product relative to the competition. It is necessary to find what attributes are important to purchasers and users of the product and then determine how the company or product compares to the competition on these attributes. These may be attributes that a marketer need to improve.
Step 6: Purchase Rates I Buying Habits
The marketer should analyze purchase rates and buying habits to further determine where, how, and why consumers are purchasing the company's product. Buying habit information can provide invaluable insight into the target market and provide impact for
13 mark~ting decisions during the writing of the marketing plan. These decisions revolve
around either trying to change current consumption patterns (which is more difficult) or
recognizing the patterns and modifying the product is sold to better meet the needs of
the target market.
Purchase Rates of the Product Category and The Company's Product by
Geographic Markets.
Geographic markets should be analyzed for their importance in sales for the
category and sales for the company's product. Look for markets where the product
category does very well from a sales per capital standpoint, but the company's product
is either not marketed or is not doing well relative to other markets. If the category is
performing well in these markets, there exists potentials a marketer may want to tap in the subsequent marketing plan. In addition, it is helpful to identify strong company markets so that a marketer can protect them and keep them strong. Finally, a marketer
needs to identify the weaker company markets and develop alternative plans to grow them or decide that a marketer will fund only the profitable markets. Before these decisions are made, a marketer needs a clear picture of the strength of the markets on a geographic basis.
Buying Habits
Buying Habits, such as frequency of purchase, also need to be determined. In analyzing the average time between purchases, the marketer can makes decision about how frequently the business needs to advertise and promote the product. This information also helps when making promotion decisions. If the product is purchased only once a year, a viable strategy would be to provide a strong incentive for purchase prior to the typical purchasing season. Or, if the purchase decision is made frequently at short intervals, a continuity program of lower media weight levels might be required.
14 In addition to frequency of purchase, the marketer should also determine whether the purchase decision is made spontaneously in-store or planned prior to shopping. We did work for a product that was purchased spontaneously in-store 90 percent of the time.
Obviously, point of purchase advertising and display became critical to the product's success. Finally, in looking at buying habits, everything about the purchasing environment should be analyzed: the psychology of the purchaser at the time of the purchase, the average purchase ratio (for retailer, this is the number of times a consumer comes into a retail store and purchases, versus not purchasing and walking), and the actual purchasing habits. This information will lead to strategic marketing decisions aimed at better meeting the needs of the target market.
Step 7: Distribution
Distribution is the method of delivering the product to the consumer. In the business review, the job is to determine which method of distribution is used most successfully in distribution varies depending on the type of business category.
Retail
Retailers need to be aware of how and where their product is sold in relation to the industry. There are many unique ways to distribute the product to the consumer, and retailers should be aware of which distribution methods are increasing or decreasing in their industry and the advantages and disadvantages of the different methods.
Channels Type/Trends.
The retailer has to determine and review the optimum outlet category for the product being sold and the consumer who is purchasing. Common retail distribution outlet categories include mass merchandise, discount, off-price, department stores, specialty shops, chain stores, and direct mail. Each is a unique distribution method a retailer can use to sell the product to the consumer. To do this, it helps to analyze the
15 current channel trends. The business review may determine that for the product category, the two fastest growing methods of distribution are smaller, single-line specialty shops and direct mail. If a marketer were not currently using these channels, a marketer would need to address the industry's shift in emphasis towards these alternative methods of distribution in the marketing plan. This could be done by adapting some of the strengths of specialty store retailing to the channel environment or by experimenting with direct mail.
Geography.
The geographical distribution of outlets should be studied. Try to grade the location of the stores relative to the competitors. Is the firm located in the optimal trading areas of the market? Are they easy to get to and do they have good access? Are they on or near thoroughfares with high traffic counts and other thriving retail locations? Penetration. Optimum penetration levels (number of stores per market) should be calculated to determine whether more distribution outlets are needed.
Step 8: Pricing
Price is a prominent part of the marketing decision making process. A price that is too high may discourage purchase of the product and encourage competition in the form of lower price and more entries into the product category. Alternatively, a price that is too low may be a deterrent to reaching profit and sales goals.
The business review section on pricing is designed to provide pricing data relating to competition, changes in the marketplace price structure, and strengths of consumer demand. This information will provide a reference to help guide the pricing objectives and strategies in the subsequent marketing plan. The Business review should provide a marketer with four major insights on pricing:
16 (1) The price of the product /brands relative to the competition.
(2) The company's sales by price point relative to the competition.
(3) The price elasticity of the product. (A price elastic product is one for which,
if the price is raised, sales go down, and if the price is lowered, sales go up.
A price inelastic product is one for which, even when the price is increased
or decreased, sales are not affected positively or negatively to a degree they
are with a price elastic product
( 4) The cost structure of the product.
Step 9: Historical Marketing Review of The Company versus the Competition
This competitive analysis section is designed to provide a marketer with a
summary of how the company is performing as compared to the competition across key
marketing variables. This phase forces a marketer to consider strategic and tactical
differences and similarities between how the company markets its product(s) and how
the competition markets their product(s). An analysis of the company's marketing
activities in relation to the competition can provide benchmark information necessary to
prepare the marketing plan in Step Three through Ten. This knowledge will provide
insights into potential defensive or offensive strategies that a marketer can include in the
marketing plan to curtail or exploit a major competitor's strength or weakness. In
addition, by thoroughly studying the past marketing efforts and those of the
competition, a marketer may look at successes and failures in a new light. There might
be ways to modify some of the competitors' more successful programs and make them the own, or there might be changes that can be made to successful programs that will
make them even better.
17 '-'~t · G··a brie . 1' s Libr:.1ry, Au
Step 10: Demand Analysis. The last step in the business review is to attempt to calculate.
Demand for the product. The conclusions will be directional and are intended to provide a marketer with a rough estimate of the size of the market and the potential business a marketer might generate. It should give a marketer check to make sure the sales goals a marketer set later in the plan are realistic and obtainable.
Step Two Problems/Opportunities
Identifying Problems and Opportunities: It is very difficult to develop a marketing plan without first consolidating and summarizing the objective material developed in the business review. The business review is a reference to be utilized throughout the year. It is meant to be exhaustive in the amount of data it presents and analyzes.
However, in order to write a marketing plan, the marketer needs to crystallize specific company and product category challenges. The major conclusions from the business review should be polarized into problems to be solved and into opportunities to be exploited.
Definition: Problems
Problems are derived from situations of weakness. As with opportunities, a problem statement can be drawn from a single finding or set of findings that make for a potentially negative situation. Reviewing the target market section in the business review for a retail client, we discovered that there was a heavy purchaser group, 30 percent of which purchased 65 percent of the product. The heaviest concentration was in the females age 3 5 to 49 with children group. Yet our client was strongest in attracting younger purchasers, and while the heavy purchaser shopped at our client's store for
18 some products, the majority of her purchases were made elsewhere. This information led to the following problems under the Target Market heading:
The company's purchaser tends to be younger, with fewer age 35 to 49 purchasers
(the single strongest purchasing segment for heavy users) when compared to the heavy purchaser profile. The heavy purchaser is shopping our stores but making a majority of her purchaser elsewhere. Thus, to target the heavy user, the retailer had to develop a
program to more fully satisfy the heavy purchaser's need through the merchandise
selection and do better job of selling the customer on the full line of products.
In summary, problems focus on the firm's weaknesses. Problem statements also
address market conditions that can result in a disadvantage for the company or the
industry as a whole. The common denominator is that problems are defensive in nature.
They will result in an action taken from a current position of weakness; a marketer will
be correcting a negative.
Opportunities
Opportunities are developed from strengths or positive circumstances. Often a
combination of circumstances makes for a potentially positive situation, creating an
opportunity. When we reviewed the competitive situation for a statewide accounting
firm, we determined that there were very few accounting firms with aggressive,
disciplined marketing problems. Even fewer actually advertising, none was targeting
small to medium sized businesses. An earlier demand analysis had shown that the
greatest potential for our client was in providing a full range of accounting services to
small to medium sized businesses in the retail, service, and financial SIC categories.
In summary, opportunities are statements that point out strengths of the firm. They
also identify areas where the company can exploit a weakness of the competition. They
address market conditions that can result in an advantage to the company if positive
19 action is taken. Opportunities are offensive in nature. They will result in an action
capitalizing on strengths.
Step Three Setting Sales Objectives
When a marketer begins writing a marketing plan, the first task is setting sales
objectives. This is one of the most complicated and important steps in preparing an
effective marketing plan. The more a marketer understands about the process of arriving
at a sales objective, the easier it will be to write a marketing plan that will meet sales
objectives.
Definition: Sales objectives are projected levels of goods or services to be sold.
Setting sales objectives is critical because it sets the tone of the marketing plan.
Everything that follows in the plan is designed to meet the sales objectives from
defining the size of the target market and establishing and promotion dollars to be
budgeted, to the actual hiring of marketing and sales personnel, to the number and kinds
of distribution channels/stores utilized, and, very importantly, to the amount of product
produced or inventories.
The Process of Setting Sales Objectives
The recommended process to set the sales objectives is based on three steps:
(1) Set individual sales objectives using three different quantitative methods.
(2) Reconcile these different quantitative goals into composite sales objectives.
(3) Adjust the quantitatively arrived at composite sales objectives through the
interpolation of the relevant subjective qualitative factors, such as the
economy and competition.
Step 1: Set Quantitative Sales Objectives
If the data are available, we suggest that use three different quantitative methods:
outside macro, inside micro, and expense plus. Each method will develop a sales
20 objective estimate, and each estimate will provide one of three parameters from which to make realistic judgments in arriving at final sales objectives. Each method can be used exclusively in arriving at a sales objective; however, the final outcome will not be as reliable as when a marketer apply all three approaches. By using the three different approaches, a marketer develops sales objectives derived from three different sets of data- a safeguard against using only one set of data that might not be totally reliable or encompassing.
Step 2: Reconcile Sales Objectives
Now that a marketer has arrived at outside macro sales objectives, inside micro sales objectives, and an expense plus sales objective, a marketer must reconcile the differences to establish the sales objectives for the marketing plan. After reviewing the sales objective alternatives based on this methodology, a marketer may decide to go with a pure average of the three or a weighted average, placing more emphasis on one alternative than the other. Or a marketer may use the (weighted) average of two, or just one. The important aspect of step 2 is that a marketer have reviewed the data from various quantitative perspectives. This will help a marketer arrive at a sales objective with the eyes wide open and with an understanding of the dynamics of setting a sales objective. For the most meaningful sales projection, attempt to apply all three methods, or at the every minimum, two methods that a marketer can use for comparison.
Step 3: Qualitative Adjustment of Quantitative Sales
Now that a marketer has arrived at quantitative sales objectives, a marketer should review again the qualitative factors that will .have an impact on future sales.
A marketer needs to temper the numerically derived sales objectives with more qualitative forecasting factors. Using the appropriate qualitative factors, a marketer can increase or decrease the composite dollars and unit/transactions/persons served sales
21 objectives through an assignment of positive or negative percentage points depending on the estimated degree of impact by each qualitative factors. If the economy is growing and the economic outlook is bright, a marketer might increase the composite sales objective by two percentage pints. Or a marketer may decrease the composite sales objective by four percentage points because an aggressive competitor has moved into the trading area. If there is more than one major impacting factor, a marketer can balance their effect through averaging.
Plan to Revise the Sales Objectives
The sales objectives will most likely be revised more than once as a marketer writes the marketing plan. A marketer may uncover a greater than expected sales potential among a target market. Or a marketer may determine the company does not have the necessary capital, there is greater competition than expected, or there is not enough consumer demand, which could all negatively affect the estimated sales objectives.
Once the marketing plan is finalized (ideally, two or three months before the start of the fiscal year), it is wise to keep the sales objectives current. Review the sales objectives at two months, five months, and eight months into marketing plan year in order to adjust the sales objectives for the second, third, and fourth quarter of the fiscal year. This will help a marketer maximize the sales and control the expenses in a timely and profitable manner.
Step Four Defining the Target Market
Once a marketer has developed sales objectives, a marketer must determine to whom a marketer will be selling the product. Making this determination is really defining a target market- a group of people with a set of common characteristics. Target
22 marketing allows for a concentration of effort against a portion of the population with similar purchasing needs and buying habits.
Segmentation is a selection process that divides the broad consuming market into manageable segments with common characteristics, enabling a marketer to realize the greatest potential sales at the lowest cost. Develop the target market by first selecting the current and potential purchaser and/or user of the product and, second, by breaking down this broad group into the most relevant segments for the most effective and efficient communication and selling of the product.
In segmenting the markets, a marketer define the ultimate purchasers or users of the product, who will become the primary target. A marketer also may find it necessary to define and consider secondary targets, such as a smaller but growing or high consuming and/or very profitable segment. Other potential secondary targets might be influencer marketer. If a marketer were marketing a consumer service of hospital, a marketer would market not only to potential patients but also to the physicians who, as influencers, refer patients to the hospital.
Consumer Primary Target Market
Step 1: Determine Purchaser and/or User
A marketer must determine whether the primary target group will include purchaser, user, or both. However, keep in mind that it is very difficult to effectively market to two primary markets. Because this is the first and most encompassing step in the defining process , step back and attempt to determine which of these two strategies is the driving force and what makes up their purchase and usage behavior. Consider these five factors in the determination:
23 (1) The amount purchases and/or used
(2) The degree of influence on the usage and purchase decision
(3) The size of the market
(4) Who the competition chooses as its target market.
(5) The inherent benefits of the product to one target or the other
Step 2: Compare Current Target to Demographic and Geographic Market Profile
Now that a marketer has determined the primary user or purchaser, compare the demographic profile of the category to the demographic profiles of the current customers, which a marketer can quantify through market and/or customer research. By comparing the customer market with the demographics of the total category, a marketer can determine whether a marketer must adjust the current target focus to realize greater market potential for the product. Through an analysis for a retail client experiencing low sales per store, we found that its customer target market was primarily blue-collar with an annual income of under.
Step Five Setting Marketing Objectives and Strategies
Marketing objectives and strategies form the foundation of the marketing plan.
Marketing objectives describe that needs to be achieved in order to meet the sales goals, and marketing s strategies describe how the objectives will be accomplished. Marketing
Objectives is a statement of what needs to be accomplished. Marketing objectives are ends to be achieved. Differentiating between marketing objectives and marketing strategies is not always easy and is a source of confusion even for experienced marketing professionals. To show the difference between the two, we have detailed those properties we believe make up a marketing objective. A marketing objective must
(I) Be specific. The objective should focus on one singular goal.
(2) Be measurable. The results must be able to be quantifies.
24 (3) Relate to a specific time period. This can be one or more years, the next six
months, or even specific months of the year.
(4)Focus on affecting target market behavior.(For example, encouraging shopping,
trial of a product, repeat purchase of a product, larger purchase, more frequent
purchases, etc.) Often, objectives are set for individual segments of the target
market.
How to Develop Marketing Objectives
(1) Review Sales Objectives
(2) Review the Target Market
(3) Review of Problems and Opportunities
(4) Formulate a Rationale
Marketing Strategies is a statement detailing how an individual marketing objective will be achieved. It describes the method for accomplishing the objective.
While marketing objectives are specific, quantifiable, and measurable, marketing strategies are descriptive.
Step Six Positioning Strategies
No matter what a marketer are marketing, a salient positioning is necessary. It is the basis for all the communications: branding, advertising, promotion, packing, sales force, merchandising, and publicity. By having one meaningful, targeted positioning as a guide for all the communication, a marketer will convey a consistent image. Each vehicle of communication conveying a common positioning will reinforce the others for a cumulative effect, maximizing the return of the marketing investment. Accordingly, everything a marketer does from a marketing perspective must reinforce one positioning. Otherwise, a marketer will not only undermine the marketing efforts but confuse the target group as well. Because of the inclusiveness of positioning, a marketer
25 must look for a positioning that is not only right for the product now but will also be adaptable years into the future for both the marketplace and the product.
Positioning Considerations.
In order to arrive at a successful long-term positioning, a marketer must consider the inherent drama of the product a marketer is selling, the needs and wants of the target markets, and the competition. The business review and the problems and opportunities a marketer have completed, along with the target market determination and marketing strategies a marketer developed, are keys to arriving at the right positioning.
A marketer must understand the strengths and weaknesses of the product versus that of the competition. Where is the product comparable to the competition and where is it different? Where is it unique? And most important, what do these competitive differences, if any, mean to target market? If the position reflects a difference that the product cannot deliver or that is not important to the target group, the position will not be successful. And even if the product possesses a meaningful difference, the positioning will not be effective if the target group does not perceive it as meaningfully different. As a marketer develop the product positioning, a marketer must deal with the target group's perception of the competing products even though it is not altogether accurate, because they are the buyers, and consequently their perception is the truth.
A marketer must closely evaluate how the product ties to the target market relative to the competition in order to arrive at a specific positioning or mapping step-by-step methods.
Step Seven Marketing Mix Implementation Tools
Product/Service: In the case of consumer package goods, retail, and business-to business companies, the product is a tangible object that is marketed to customers.
However, for service businesses, the product takes the form of some intangible offering.
26 Often for a service business, the product is a future benefit or future promise. Thus, while all products are offerings to the customer, there is an inherent difference between what is sold by a service firm and what is sold by a retailer or manufacture.
How to Develop a Product Plan:
Step 1: Establish Product Objectives
(1) Product objectives will center around one or more of the five following
areas:
(2) Developing new products
(3) Developing line extension for existing brands
(4) Developing new user for existing products.
(5) Product improvement
Finding more efficient ways to produce the product in the case of manufacturers or purchase the product in the case of retailers
Step 2: Establish Product Strategies
Product strategies define how the product objectives will be accomplished.
Branding:
Branding is the naming of the product, service, or company, with which consumers associate the product. For this reason, brand or name should help communicate the product's positioning and its inherent drama for the consumer.
How to Develop a Brand Name
Step 1: Establish The Branding Objectives
Branding objectives should state for what the new name will be used (e.g., existing product, new product, product line extension, improved product, repositioned product) Also, the objective should include a final decision date for when the final name will be selected.
27 Step 2: Establish The Branding Strategies
It is important to prepare a branding strategy before developing name alternative.
This greatly increase the probability that a marketer will arrive at a name that is consistent with the product and takes into consideration all of the uses of the name over the short and long term. This strategy should flow from the positioning statement and be followed by a listing of parameters for the new name. The branding strategy should highlight those components that will communicate the key perceptions to the key targets.
Step 3: Establish Branding Property Parameters
Along with the branding strategy, include branding property parameters. These are an extension of the branding strategy and provide specific guideposts in name development. Potential branding parameters are:
(1) Reflects positioning of the product
(2) Provides generic identification and clearly identifies with its functional
category.
(3) Is preemptive
(4) Contributes to awareness and knowledge of its purpose
(5) Is memorable
Provides potential for growth of other entities/line extension under its umbrella name.
Step 4: Name Generation and Selection
Using the branding strategy and name property parameters as a guide, begin the name development process by generating a multitude of name alternatives, it is conceivable that the name alternatives could number into the hundreds. Next, using the branding strategy and name parameters as the decision criteria in the screening process, pare back the names in a disciplined manner to approximately ten names. Then follow
28 with a legal search of these names for trademark availability. Finally, a marketer would
be wise to research the remaining name alternatives with the target markets before making a final branding decision.
Packing
For manufacturers, packaging protects the product and assists in communicating the product's attributes and images. For retailers and service firms, packaging is the
inside and outside environment that houses and dispenses the product/services and helps to communicate the company's attributes and image.
How to Develop a Packaging Plan
Step 1: Establish The Packaging Objectives: Focus packaging objectives on the
following
Manufacturer: create awareness for the product at the point-of-purchase.
Retailer: create awareness of the retail facility from the outside through the external
store environment and awareness of the products inside through the internal store environment.
Manufacturer and Retailer
(1) Communicate product attributes and positioning.
(2) Generate trial
(3) Provide protection for the product
(4) Allow easy usage of the product.
(5) Communicate promotional offerings.
Establish the time frame for development or when the package design will be ready for
production.
29 Step 2: Develop The Packaging Strategies
Packaging strategies delineate how the objectives will be accomplished providing specifics such as shape, size, color, copy, design, and for retailers overall store environment.
Price:
The pricing marketing mix toll is one of the most difficult for which to develop a plan. The pricing of the product is critical yet difficult to determine because it must be high enough to cover costs and make a profit for the company, yet low enough to maximize demand and sales potential. In addition, the pric of a product affects the product's positioning.
How to Develop a Pricing Plan
Step 1: Establish the Price Objectives
(1) Price objectives usually focus on the following issues:
(a) Lower, higher, or parity pricing
(b) Geography of the pricing
(c) Timing of the pricing
( d) Lower, Higher, or Parity Pricing
(e) Reviewing the marketing strategies and the pricing problems and
opportunities in the context of the following factors will help a
marketer determine whether the company should set a higher, lower, or
parity price objective.
Lower Price Objective: the reasons for a low price strategy include the following:
(1) To expand the market, allowing new consumers who couldn't purchase at
higher prices to become purchasers.
(2) To increase trial and/or sales due to price incentives.
30 (3) To exploit a situation with a strong price elastic product where a low price
results in increased demand. The result is lower margins but increased profit
because of the increased volume.
Higher Price Objectives: Several conditions favor a high price objective, where the price of the product will equate to revenues substantially above the break-even point, or the product's rice is set above that of competition.
(1) To allow fast recovery of the firm's investment.
(2) To provide faster accumulation of profits to cover R&D costs. The profits
can then be used to improve the product and to sustain competitive marketing
tactics once competitors enter the market.
(3) To substantiate a quality image positioning.
(4) To exploit a situation in which the product is price inelastic, and the demand
or sales decrease only marginally with higher pricing.
Parity Pricing.
Parity pricing 1s pricing that is comparable to the competition's. It can be effectively used if the product has superior attributes and is priced the same as products with inferior product attributes. It can also effectively be used when the product is similar to the competitors' but there are non-product advantages that the company can utilize to provide a better overall value to the consumer. Non product, such as service, guarantees, location for retailers, or distribution channel for manufactures, are often reasons to purchase, given a parity pricing structure in the marketplace among similar products.
31 Distribution.
How to Develop a Distribution Plan
Step 1: Establish Distribution Objectives
(1) Establish quantifiable distribution objectives for the following four
categories.
(2) Penetration (retailers and service firms) or market coverage/shelf space
(manufacturers)
(3) Type of outlet
(4) Geography
(5) Timing
Step 2: Establish Distribution Strategies
The distribution strategies should describe how a marketer will accomplish the
distribution objectives. The following should be considered by each business category,
Retail and Service Firms
Describe the criteria or methodology for penetrating markets or adding new
locations. Where will a marketer locate new stores?
If a marketer is expanding geographic penetration, specify whether this will be done on
a systematic market-by-market basis or wherever the opportunity develops within the
total system. If a change is warranted, describe how a marketer will make the change
from one type of outlet to another. Describe the purchase or lease strategies.
Manufacturers
Personal Selling and Operations: involve the personal one-on-one contact the
company has with the specific target consumer and the day-to-day administration of the
selling program, the retail outlet, or the office. Whether it's business-to-business or
consumer marketing, personal selling is a very important tool that incorporates the
32 critical human factor into the marketing mix. It is the one personal and direct link between the target market and the company.
How to Develop a Personal Selling/Operation Plan
Step 1: Establish Selling/operation Objectives:
Sales/operation objectives should be as specific as possible; designate a time period for which they apply, and include the following items. For Retail/Service
Consumer contact-the percentage of store visitor having contact and number of contacts with store staff during a visit. Customer behavior goals, such as percentage of customers who are persuaded to try on or experience a demonstration of merchandise the specific sales ration. For Manufacturers, The number and type of companies that must be contacted by the sales force. The number of sales calls that must be made to each prospect and/or current customer by company type. The sales ratio (number of contacts versus the number of orders per sales)
Step 2: Establish Selling/Operation Strategies
The type of selling environment. A retailer must decide whether the selling environment will be self-service, or whether there will be a full-service sales staff. If there is a full-service sales staff, the decision must be made as to the selling orientation hard sell or soft sell. The administration parameters of the sales force. The selling strategies should outline hiring qualification, salary ranges, and payment methods, Sales incentives Seasonal and geographic requirements.
Promotion
Promotion is a powerful short-term marketing tool. Developing a promotional plan requires strategic thinking and creativity. We will define promotion as an activity offering added incentive to stimulate incremental purchase or association with the product over the short run, for a reason other than the product's inherent attributes and
33 benefits. Promotion provides added incentive, encouraging the target market to perform
some incremental behavior. The incremental behavior results in either increased short term sales or an association with the product.
How to Develop Promotion Objectives
Promotion Objectives Parameters:
Promotion objectives and marketing objectives are very similar in that both are
designed to affect consumer behavior. The difference is that promotion objectives should be designed to affect specific incremental behavior over a short period of time.
Therefore, promotion objectives must:
(1) Induce incremental consumer behavior over what was anticipate with no
promotion
(2) Be specific
(3) Be measurable
(4) Relate to a specific time period
(5) Provide direction as to the geographical focus of the promotion
(6) Include budget constraints or profits parameters
Step 1: Review The Marketing Strategies:
Review the marketing strategies, paying particular attention to those listed under the promotion category and those for which the implementation tool of promotion category and those for which the implementation tool of promotion might be appropriate.
Step 2: Review the Selected Marketing Strategies and their Corresponding Marketing
Objectives.
34 Step 3: Restate the What, Who, and How Portions m a Quantifiable Promotion
Objective.
Promotion Strategies and Execution Considerations
Promotion Strategy Parameters:
Once the promotional objectives are established, promotion strategies must be formulated demonstrating how to accomplish the promotion objectives. Promotion strategies should include
Type of Promotion Device:
The marketer has to determine which promotional device (price off/sales, coupling, sampling, on pack/in pack, refunds, premiums, sweepstakes/games, packaging, trade allowances, events) will best meet the promotion objectives.
The Promotion Incentive: the promotion incentive must include a basic reward for the consumer. Since promotions are responsible for affecting target market behavior, the incentive must stimulate demand. The promotion incentive must be strong enough to move the market to participate in the promotion and purchase the product.
Closed versus Open Promotions:
A promotion can be open or closed. There are also degrees between these two extremes. An open promotion is one where the company offers an added incentive to purchase with no specific behavior requires to take advantage of the offer. With a closed promotion, an added incentive to purchase is offered to consumers, but they are required to do something in order to take advantage of the offer.
Delivery Method
Promotions can be delivered by three methods or a combination thereof:
Media. There are multiple forms of media delivered promotions. Direct mail, magazines, and newspapers are the most common media delivery methods for package
35 goods and business-to-business firms, while television, newspaper, direct mail, and ratio are the most common media delivery methods for retail firms.
On, in or near package. For manufacturers, promotion can be delivered on the package itself, in the package, or near the package via a point-of-purchase display. For retailers, the promotions can be delivered in-store through signage an point of purchase display.
Salespeople. Many companies, especially manufacturers, such as package goods or business-to-business firms that sell to intermediate markets, use salespeople to deliver a promotional offer.
How to Develop Promotion Strategies and Programs.
(1) Review The Promotion Objectives
(2) Review The Problems and Opportunities
(3) Finalize The Promotion Strategies
(4) Develop Alternative Promotion Program Executions
(5) Calculation the cost and payback potential of the Promotions.
(6) Select the most Appropriate Promotion Executions.
Advertising
Step 1: Advertising Objectives
Advertising Awareness and Attitude Objectives:
Advertising objectives deal with what a marketer wants the advertising to accomplish. the advertising objectives nearly always will define awareness and attitude goals as they relate to the target market. The objectives are quantifiable, while the advertising strategy is not. The strategy deals primarily with describing the necessary message communication to fulfill the advertising objectives.
36 At a minimum, to help sell the product, advertising must first attract attention, building awareness for the product. While just having awareness will help sell some products, in most cases the target market must also have a positive attitude toward what a marketer is selling, particularly beyond what is being marketed by the competition.
Step 2: Advertising Strategy: should include the following:
Promise: Define the reward/benefit for the target market in solving a problem or taking advantage of an opportunity.
Support for this Promise: Give substantiation for the promise or reasons to believe.
Tone: Describe the feeling of the planned advertising that is consistent with the personality of the product. The tone must be appropriate not only for the product but also for the target market of the advertising.
Step 3: Consider the Executional Elements:
The execution portion of the advertising section outlines those specifics that must be included in the advertising. Under executional considerations, a marketer might want to include additional copy or product information that is important to know but, to maintain strategic focus, is not included in the advertising strategy. This additional product information will provide for creative enhancement and increased understanding when developing the actual advertising.
Merchandising
We define merchandising as the method to communicate product information and promotions through non-media communication vehicles. Merchandising is a way to make non-media visual or written statement about the company with or without one-on one personal communication. Merchandising includes brochures; sell sheets, product display, video presentation, banners, posters, shelf talkers, and table tents, or any other tools that can be used to communicate product attributes, positioning, pricing, or
37 St. Gabriel's Library, Au
promotion information through non-media vehicles. Merchandising communication can be delivered through the following methods: Personal Sales Presentation: often brochures, sell sheets and other forms of merchandising are used to enhance a personal sales visit. Point-of-Purchase: In many product categories, over two-third of the actual purchase decisions are actually made at the point of purchase. For this reason, merchandising is a useful tool at the point of purchase to influence in-store purchase decisions Events: Merchandising is implemented through special events or company functions where contact with target market occurs through sales meeting, conventions, mass participation events, concerts.
Publicity:
This is the last marketing mix tool to include in your marketing plan. In most cases, publicity will play a key but less important role in the marketing plan than many of the other marketing tools. We define publicity as nonpaid media communication that helps build target market awareness and positively affect attitude or the product or firm.
Publicity provides the firm or product with a benefit not found in any other marketing tools. Since publicity utilizes nonpaid communication through independent news media, it adds a dimension of legitimacy that can't be found in advertising. Obtaining publicity for the firm or product can be difficult, with no guarantees on placement or what is ultimately communicated, since publicity is nonpaid and to a larger degree non controllable.
How to Develop a Publicity Plan
Step 1: Establish The Publicity Objectives
(1) Specific purpose of the publicity effort
(2) The specific target market (medium and audience)
38 (3) The expected level of exposure, by medium, to be generated from the
publicity effort.
Step 2: Establish The Publicity Strategies:
Placement and type of news releases or stories
Coverage via interviews and/or news conferences with television, ratio, newspaper, and magazine editor representatives.
(1) Participation in talk shows and local interest programs
(2) Visibility at convention, seminars and public events
(3) Public service announcements
(4) Make sure the news media is thoroughly aware of the event or product's
news
(5) Details a specific follow-up procedure.
Step Eight Marketing Budget, Payback Analysis, and Marketing Calendar
After completing the objectives and strategies for each tool of the marketing plan, a marketer needs to prepare a budget, project a payback from the results of his effort, and develop a marketing calendar. This process involves three separate steps. Develop a budget to provide estimated costs associated with each marketing tool used in the marketing plan.
Utilize a payback analysis to determine whether the results of the marketing plan will produce adequate revenues to meet sales and profit goals, a marketer may need to revise the budget or the marketing plan objectives and subsequent strategies and executions. Once a marketer have reconciled the budget and payback analysis, a marketing calendar should be developed to provide a summary of all marketing executions is one visual presentation.
39 Step Nine Execution
Once the marketing plan is finally completed, a marketer will execute the plan in
the market place.
Step Ten Evaluation:
After the "in the marketplace execution" of the marketing plan, a marketer needs
to evaluate the results. An evaluation methodology should be established to assure
ongoing evaluation of the marketing plan execution.
Comparative and Sales Trend Method:
This sales evaluation method analyzes current sales with the previous year's sales
before, during and after any given marketing execution. Sales are analyzed before the
promotion period to determine if there was a downward, upward, or flat sales trend
compared to previous year's sales. There are two sales trending methods: sales trending
analysis with control markets and without control
Pre-and Post Research:
Pre-and postmarket primary research is implemented both before and after the
execution of the plan. Most pre-and post research involves awareness, attitude, and behavior tracking studies. These studies monitor the movement of awareness, attitude,
and behavior variables both before and after the marketing execution. While increased
sales is a very valuables indicator of the success of a marketing execution, it is not the only one. Many times while sales remain relatively shifts signal the probability of future
increases in sales.
2.2 Confectionery Industry Review
While the pressure cooker economy has taken the steam out of many industrial sectors, confectionery and bakery are still steadily rising. Indeed, the global market for
40 confectionery products and baked goods continues to show strong growth. However, it is the Asia Pacific market that is showing some of the most impressive year-on-year growth from its nations. In China, where the food industry is expected to grow at an average annual rate of 18 percent, the population has found its sweet tooth. Total sales of confectionery have risen by over 200 percent in value over the last ten years. The
Australian confectionery market is particularly strong, with the nation leading the world in per capita consumption of biscuits. The overall value of confectionery goods is estimated to be around AUS$4 million. The bakery sector is equally strong in Australia, with an annual turnover of about AUS$3.5 million. In Korea, the bakery market has soared to a value of around AUS$2 million. The future of the sector looks equally bright in the region. The sales value of confectionery in Japan is expected to rise by seven percent in real terms to reach ¥980 billion by 2004. Volume sales are expected to increase by six percent to total 464, 100 tons by 2004. The bakery market in Japan is forecast to increase by around nine percent in terms of sales volume, and eight percent in value terms in the next two years. Analysts suggest that the Asia Pacific confectionery market will continue to grow at an average of approximately eight percent every year, while baked goods will demonstrate similar expansion. The markets are evolving at a staggering rate in the region, with changing consumer tastes and approaches to production fuelling growth and investment in operations. Indeed, most areas relating to the sector - from retailing to bakers to the manufacturers of machinery are exploiting the lucrative market to negotiate the difficult economic environment.
The changes in the food and confectionery markets can be demonstrated no clearer than in China. The market for baked goods and confectionery was traditionally very conservative in China. However, in recent years there has been a rapid transformation in eating habits. Baked foods were relatively insignificant in the Chinese market until a
41 short time ago -largely because the Chinese consumer was not used to eating western
foods. However, bakery fast food chains such as Deliverance are opening branches across the country, bringing croissants, sandwiches and pastries to urban consumers.
Branches are already established in Beijing and Shanghai, cementing the popularity in
Asia that the company had already achieved in Singapore and Hong Kong. The arrival of fast food chains and western-style supermarkets has meant greater awareness of baked foods and confectionery, and the emergence of a Chinese society able to try new products. Historically, confectionery within China had been restricted to dried and preserved fruits. But the spread of supermarkets has brought the confectionery market to the average shopper, with the growing chains of convenience stores becoming major distribution channels for confectionery products.
As a result of these increasing western influences, there has been a sweetening of the Chinese palate, creating an increasing demand for new confectionery products.
Across Asia Pacific the multiple grocers now have a tight grip on the market for bakery products, with an estimated 30 percent share of the sector. The spread of supermarkets is a trend that can be witnessed throughout the region. In Australia, grocery chains have grown from 48 percent of the market to 60 percent in just over five years. This has meant that the bakery market has made great strides in Asian nations that traditionally have not had large demand for baked goods. Rising average annual incomes in China have also had a major impact on the market.
The growth in ownership of fringes and freezers has ensured that part-baked and frozen rolls have become popular. However, despite this unprecedented growth in bakery products and confectionery goods, the market is currently dominated by foreign businesses. Domestic production of baked goods remains low, while foreign confectionery manufacturers have targeted China as a growth market, leaving domestic
42 manufacturers struggling to compete with the imports. There is similar competition in other Asia Pacific markets. In Australia, the confectionery market is dominated by three major foreign companies (Cadbury Schweppes, Nestle and Mars Confectionery), which have a combined market share of 75 percent. Overall, around seven percent of
Cadbury's entire production is directed specifically at exports into Asia.
A large proportion of confectionery in Singapore is also imported. The market is made up of around US$65 million in imports of chocolates, medicated sweets and other sugar confectionery and over US$120 million in local production of chocolates and chocolate products, largely ingredients. This significant foreign presence in Asia Pacific has ensured that domestic bakers and confectionery manufacturers have had to improve their selections and operations to remain competitive. Fortunately, through a combination of investment and expansion, local manufacturers are not only consolidating their position within the market, but also carving themselves a larger slice of the expanding sector.
Much of the recent investment in operations by domestic bakery and confectionery businesses has been to bring in modem, efficient systems that will result in cost savings in the long-term. In India, many bread manufacturers have switched to compact, fuel efficient and high-yielding ovens, spiral kneaders and planetary mixers in a bid to cut costs and increase efficiency. The current trend is to move away from electric ovens, which are seen as being uneconomical because of the power costs, and replace them with liquefied petroleum gas (LPG) and oil-fired ovens. Compared to conventional ovens, the new generation equipment is often slightly more expensive, but they compensate with increased yield and efficiency - and many Asian businesses are keen to exploit the economic benefits of the new machines. The changing consumer tastes have also prompted a shift towards machinery that can produce niche products. Because
43 of the increasing western influences and supermarkets, there has been a sweetening of the Asian palate, creating an increasing demand for new confectionery and bakery
products. In Singapore, there is an increasingly high demand for specialty breads with
flavours and ingredients like apple, coffee and nut, apricot, banana walnut, fruit and nut
and raisin.
In Japan, as consumers become more health conscious, confectionery manufacturers are focusing more on niche markets with lower volumes to increase
competitiveness and meet consumer demand. Malaysian biscuit manufacturer Hwa Tai
Industries has evolved from making traditional salted crackers to creating a spate of new
and unique products under its Luxury brand to cater for new tastes. The company invested around US$3 million into buying a state-of-the-art Sasib baking line in 1998 that enabled them to produce products that the consumer would not have seen on the market before. In 1999, hi-calcium cream sandwich biscuits were introduced in three flavours - peanut butter, lemon and peach - as well as offering consumers added beta carotene, vitamins C and D. The rollout continued with Cal-Rich Digestive biscuits and
Flipper children's biscuits. The statistics speak volumes, with estimates suggesting that around 30,000 cartons of the digestive biscuits are sold every year.
Around a third of the company's production is now exported, including many products to other Asian nations including China, Taiwan, Hong Kong and Singapore.
Consumer purchase patterns are also shifting towards fresher and higher quality products, and away from mass-produced goods - again demanding that some companies refocus and change operations and machinery. This shift towards more efficient/niche machinery has also opened up a lucrative market for the manufacturers of bakery/confectionery machinery. The combination of strong growth in the regional bakery and confectionery market, and unprecedented social changes - such as consumer
44 tastes, the expansion of supermarkets and the general westernisation of the sector - has meant that sales of machinery in the Region is as successful as the final products themselves. This can be demonstrated by the results of US-based producer of confectionery and bakery machinery, LMC International. The company began selling machines to Asia in the 1950s, and has witnessed the market expansion first hand. Its sales to Asia currently represent over 58 percent of its total international sales - an increase of around 175 percent in less than ten years. Indeed, the strength of the Asia
Pacific confectionery/bakery market is such that it is benefiting the whole supply chain of the sector. It is this very reason why the market has now emerged as a key target for many machinery manufacturers, supermarkets, retailers, bakers and confectioners. And in light of the prevailing economic climate, the region is a pillar of strength for the whole industry.
2.3 Information of Republic of China
Macroeconomic Update
Over the past five years, external demand for China's output has been affected by the shocks of the Asian financial crisis (1997-98) and the global economic slowdown
(2001 ). In addition, the increasing pace of corporate reform as well as weak rural income put downward pressure on domestic consumption and investment. In the face of weakened external and domestic demand, the government engaged in expansionary fiscal and monetary policies to sustain growth and job creation. Consequently, the economy managed to maintain an average growth rate of 7.8 percent over the period
1997-2001. Expansionary fiscal policy, especially an increase in government infrastructure spending, continued in 2002. The government has also raised civil servants' pay from July 1, 2002, the fourth hike after those in 1999 and 2000
(twice).These simulative measures have contributed to maintaining growth in domestic
45 demand. Monetary policy has also been broadly simulative throughout the past five years. Interest rates were reduced in successive steps in 1998 and 1999. In February
2002, the People's Bank of China (PBC) reduced interest rates by another 0.5 percentage points, and in May it raised the target growth rate for M2 from 13 percent to
14 percent; a further proposal has been made to raise it even higher for the remainder of the year.
By October, it was clear that China's economy had regained its growth momentum. This was due to the combination of an increase in external demand resulting from the moderate recovery in the global economy and expanding foreign direct investment, as well as the effect of the domestic simulative measures. However, deflation, which had reemerged in September 2001, continued throughout 2002.
Trends
Output and Expenditure
GDP growth accelerated from 7.3 percent in 2001 to 7.6 percent, 8.0 percent and
8.1 percent in the first three quarters of 2002. Industry was the key engine of growth, with output increasing from 8.7 percent in 2001 to reach 10 percent in the first three quarters. Manufacturing output increased from 9.9 percent in 2001 to 12.2 percent.
Indicative of the foreign direct investment (FDI) and export driven growth, output of foreign funded enterprises rose by 12.7 percent in the first nine months. The services sector, which had slowed from 7.4 percent in 2001 to 6.2 percent in 2002 Ql, turned around to grow robustly by 7.0 percent in Q2 and 6.6 percent in Q3. On the other hand, growth in agriculture, which had increased from 2.8 percent in 2001 to 3.3 percent in
2002 Ql, fell to 1.9 percent in Q2. This was due partly to the effect of the spring drought, which resulted in a 2.9 percent decline in summer grain production. However,
Q3 growth was 3 .8 percent, and prospects for the remainder of the year look even better.
46 Reflecting the effect of stimulative fiscal policy, total fixed asset investment rose substantially from 12.1 percent in 2001 to 21.8 percent in the period to end-September.
Investment by state owned enterprises and foreign funded enterprises were particularly strong. Overall, the bulk of public investment in the first-half was contributed by the local authorities, rising by 30.9 percent compared to the 1.2 percent increase in central government investment.
Moreover, in line with the government's focus on the less developed regions, investment growth in capital construction in the first-half was particularly strong in
Gansu, Guizhou, Shaanxi, Hunan, Jiangxi, Inner Mongolia and Shanxi, rising 25-50 percent, compared to the national average of 23.6 percent. Property investment, which rose 33 percent in the first-half, accounted for about a quarter of total fixed asset investment. Property sales reached about 7.5 percent of GDP. There was also significant linkages to the financial sector through loans to the construction sector, property developers and households. Housing mortgage loans had reached RMB 650 billion by
June 2002, accounting for about 10 percent of the total stock of outstanding loans of all financial institutions. Property prices have been rising rapidly, with prices in Shanghai increasing by 30-50 percent over the past year. This was substantially boosted by speculative demand, which was estimated by the market to account for over 20 percent of the purchases. Indicative of the rapidly increasing supply, the ratio between newly commenced construction area to area sold rose sharply during the first half of 2002, to
3.5 in Beijing and 1.9 in Shanghai. Concerned about risks of property market bubble, six government ministries jointly issued a circular in August 2002 to tighten the supply of land as well as to control new property projects by developers with poor financial standing.
47 There is still little sign that the rural-urban income gap is narrowing. Urban incomes rose by 17.2 percent in the first nine months, compared to 8.5 percent in 2001.
Over the past 30 months, income growth in the rural areas has strengthened too- rising from only 1.9 percent in 2000, to 4.2 percent in 2001, and again to 5.3 percent in the first nine months of 2002-but lags behind urban income growth by a significant margin. Indicative of the weaknesses in net income and the weakening domestic terms of trade for farmers, rural retail sales continued to fall, declining from 8.3 percent in
2000 to 7.7 percent in 2001, and further to 6.8 percent by end-September 2002. By contrast, nominal retail sales in urban areas registered an increase from 9.3 percent in
2001 to 10.2 percent. Prices, Wages and Employment Both consumer and producer prices continue to decline. After falling by 0.6 percent in the first quarter, the CPI fell by a larger 1.1 percent in the second quarter. However, the monthly trends indicated that deflation could be abating, with the decline moderating to 0.8 percent in the third quarter. Producer prices declined by a smaller 1. 7 percent in August, compared to the
2.3 percent fall in July, and the 3.4 percent drop in the first six months of the year. A part of the decline in prices was likely the result of rising productivity in the industrial sector. However, a significant contributory factor was the effect of excess supply.
Inefficient SOEs, facing soft budget constraints and with supporting loans from the state commercial banks, have continued to cut prices aggressively to clear inventories. In addition, the support of local governments to local enterprises was a contributing factor in excess production. Apart from excess supply, the sustained deflation was also partly due to the recent global commodity prices decline, as well as the WTO tariff reduction effect. In particular, import tariffs (weighted average) declined from 9.1 percent in 2001 to 6.4 percent in early 2002. Employment continues to decline in the state owned units and urban collectives. Based on administrative records, the number of employees within
48 state owned units fell from 81.0 million at end-2000 to 76.4 million at end-2001. In the
first half of 2002, it fell by a further 1.2 million. Employment in urban collectives
declined by 2.1 million in 2001 and a further 0.3 million in the first half of 2002.
However, since late 2001, the rate of retrenchment in the state owned units and urban
collectives appeared to have moderated, especially compared to the period 1997-2000.
Jobs were created in the other non-state owned sectors. Based on administrative records
which are incomplete (as they exclude the smaller private and informal sector),
employment in the non-state sector rose from 20.1 million at end-2000 to stabilize at
22.2 million at end-June 2002. Job creation continues to be at the top of the national
policy agenda. This was re-emphasized in September at a major national employment
conference. An emphasis on job creation by private businesses, labour-intensive
industries and the services sector was stressed. This urgency in job creation is likely to
lead to policies facilitating greater access of the private sector (both local and foreign)
into hitherto closed sectors like telecom, finance, power, transportation, media and
tourism. Domestic private businesses are also likely to gain greater access to capital,
both from the state commercial banking system as well as the stock market.
Fiscal
Fiscal policy has played the main role in priming the economy over the past five years. It continued to play an important role in the first half of 2002. Total revenue grew by 9.2 percent while expenditure increased by 17.8 percent. The slower increase in revenue, compared to the 23.l percent recorded in 2001, resulted from sharply lower corporate income tax as well as a substanti.al decline in tariff revenue and stamp duty.
The growth rate of corporate income taxes (14.6 percent of tax revenue in 2001) fell from 4 7.2 percent in 2001 to 11. 7 percent in the first half of 2002, and of value added taxes (36 percent of tax revenue) from 19 percent to 11.5 percent. Tariff revenue (5.6
49 percent of tax revenue) fell by 26 percent and collections of stamp duty (1.9 percent of tax revenue) declined by 65 percent ,resulting largely from the rate cut from 0.4 percent to 0.2 percent in November 2001 as well as the fall in the stock market. Increased expenditure for capital construction ( 46.4 percent), culture, science, education and healthcare (27.4 percent), pension and social security funds (41.4 percent) as well as government administration (25.6 percent) accounted for the sharp rise in government spending .. The government is issuing RMB 592.9 billion in Treasury bonds this year to fund spending as well as an additional RMB 150 billion in special bonds to finance public works. Preliminary estimates indicated that expenditure has increased beyond the estimated 11 percent in the budget, while revenue collection has also fallen short of the projected increase of 10 percent. Consequently, maintaining the fiscal deficit below the target of RMB 309 billion, or 3 percent of GDP for the year, represents a challenge. In view of the slowing tax revenue collection and rising expenditure, there is increasing pressure to reduce tax evasion, especially by private firms, foreign funded enterprises, state owned enterprises in some key industries as well as high income individuals. The personal income tax amounted to only RMB 71.6 billion in 2001, or about 4.4 percent of total fiscal revenue, a comparatively low ratio by international standard. Over the past several months, the tax authority has launched a campaign against tax evasion by private firm owners and high income individuals, particularly celebrities, entrepreneurs and high profile athletes. Some cases have been brought to court, resulting in major headlines in the local media. At a recent fiscal policy conference, the government announced its intention to maintain the deficit target for this year; it is likely , however, to be breached if present trends continue. Spending on government administration, education, science and healthcare, pension and social security funds are difficult to cut in the short run. Consequently, for the second half of the year, state investment
50 especially by SOEs and the public sector could bear the brunt of adjustment and the
rapid growth of fixed asset investment could moderate. As at end June 2002, external
debt reached US$ 169billion (13.5 percent of GDP) of which 31 percent was short term
debt. The debt service ratio was about 7.3 percent. Official data on the stock of explicit
government debt (including bonds issued in 1998 to recapitalize the four state owned
banks) was relatively low at 25 percent of GDP at end 2001. However, quasi-fiscal
liabilities, could increase the public debt to GDP ratio substantially. This would include
contingent liabilities associated with potential loan losses in the banking sector as well as the potential cost of the pension system reform. Consequently, medium term fiscal
sustainability continues to require judicious management of the trend in the fiscal deficit, accompanied by state asset sales, and SOE and banking reform, especially by reducing the potential for new non-performing loans.
Monetary As a result of banking reform and strengthened financial risk control, the growth of credit continued to slow. Outstanding loans rose by 12.2 percent in the first half. On the other hand, outstanding deposits increased by 16.5 percent. In particular, outstanding deposits of the household sector increased by 17.4 percent.
Consequently, the loandeposit ratio continued to fall from 80.3 percent in 2000 (end period), to 78.2 percent in 2001 and further to 76.8 percent by end June 2002. State commercial banks (SCB) have been cautious about lending, preferring to place funds in deposits at PBC or buy government bonds, rather than extend credit to the corporate sector. Concerned that the slowdown in SCB lending could aggravate the deflationary trend, PBC adopted several simulative measures during the first half of the year. In
February, the PBC cut interest rates, with the one year lending rate reduced by more than 0.5 percent point to 5.3 percent. This was the first reduction since mid 1999. In
May, the target growth rate for M2 for 2002 was raised from 13 percent to 14 percent.
51 In addition, the PBC issued directives to commercial banks, urging them to boost lending to consumers and the SME sector. However, in view of the turnaround in growth since the second quarter, particularly the rise in domestic and external demand, the third quarter meeting (in July) of the Monetary Policy Committee of the PBC has suggested keeping interest rates unchanged in the near term. The focus has been redirected towards tackling structural problems of the financial system. The monetary base increased by 17 .1 percent in the first half as a result of central bank intervention to stabilize the RMB. This was largely due to continued trade surplus coupled with the effect of robust inflow of FDI. Consequently, foreign reserves rose by US$30.6 billion in the first half, to reach US$242.8 billion by end June.
External
With moderate recovery in the US economy, as well as the significant increase in
FDI over the past two years, exports expanded by 19.4 percent in the first nine months of the year. Imports also rose by at a slightly lower 17.2 percent rate, but show signs of accelerating in tandem with strong FDI inflows. Actual FDI continued its upward trend, rising by22.6 percent in the first nine months to reach US$39.6 billion. Contracted FDI also rose by 38.4 percent to reach US$68.4 billion. The trade balance registered a surplus of US$20 billion over January- September.
This appears to herald a new phase of export expansion. The key driver is the rising confidence of foreign investors resulting from WTO accession, as well as the relocation of manufacturing production from US, Japan, and EU to China. The price decline in manufactured products and margin squeeze around the world have encouraged companies to shift their production base to low cost locations such as
China. This structural factor accounts for the expansion of Chinese exports at double digit rate while the global economy was slowing down. This is confirmed by
52 St. Ga briefs Library, Au
econometric estimates which indicate that over and above the effect of output growth in the US, FDI inflows have a significant effect on China's export growth, particularly of exports to the industrial country markets, and exports to all destinations of electronics and telecom equipment. In addition, export growth has been boosted by the increasing participation of the domestic private sector in direct exports, as well as the rising competitiveness from a weaker RMB on an effective exchange rate basis. The nominal effective exchange rate depreciated by 6.1 percent in 2002Hl, while the real effective exchange rate fell by a larger 7.2 percent.
2.4 Overview of Shanghai
Shanghai is the largest city in China. It is situated midway along the mainland's coast at the outlet of Yangze river into the East China Sea. With is broad hinterland and geographical advantage; Shanghai is a perfect port by its nature. The city is about 120 kilometers long from the south to the north and about 100 kilometers wide from the east to the west. Regarding the climate, Shanghai has a pleasant monsoon climate of the northern subtropics and 4 seasons. The all-year-round climate is warm and moist with average temperature about 16 Celsius. The lowest monthly temperature is at about 2-3 celcius in January, and the highest is at about 32 celcius in July and August.
Population
Shanghai covers a total area of 6,340 sq.km. Its population is about 13 million and the number for urban residents is about 62%. Shanghai has 13 municipal administrative districts and 6 suburban counties. The 13 municipal administrative districts are
Huangpu, Nanshi, Luwan, Xuhui, Changning, Jin'an, Putuo, Zhabei, Hongkou, Yangpu,
Baoshan, Minghang and Jiading. The 6 suburban counties are Nanhu, Fengxian,
Songjiang, Jinshan, Qinpu, and Chongming.
53 Brief History
In the mid-13th century, the administrative area of Shanghai Town was set up, and the town was gradually developing into a trade port. At the end of the same century,
Shanghai Town was elevated to Shanghai County. By the beginning of the 16th century,
Shanghai had become the largest textile industrial center of China. With the rising and development of China's modern industry, Shanghai had grown into a well-known inter nation metropolis in East Asia by the beginning of this century. Now Shanghai is
China's largest open city and most important economic, financial, trade, scientific and technological, information and cultural center, as well as one of the 10 big ports in the world with annual turnover of cargo exceeding 100 million tons.
Foreign Trade
Shanghai has always been a foreign trade port of the largest scale nationwide. In
1997, the import and export value through Shanghai reached US$58.68 billion, 11% higher than the previous year. Shanghai is home to numerous foreign trade companies.
Besides local import and export companies, foreign invested companies and import and export companies run by the departments of the central government, there are 3 joint venture trading companies in Pudong New Area approved by the central government on trial basis. In addition, Shanghai has lots of companies specialized in the transportation, insurance, advertising, and warehousing that provide complete supporting services to the foreign trade industry as well.
Foreign Investment
Beginning in 1996 foreign-invested projects was larger in size, wider in areas and higher in quality. In total, 1,802 projects were signed with contracted investment of
US$5.32 billion. Actual investment made in 1997 was US$6,345 billion, of which direct investment was US$4,808 billion. By the end of 1997, there were altogether 17,494
54 signed projects directly invested by foreign businesses with contracted capital running to US$29 billion.
Administrative Divisions
After several times of administration readjustment since 1949, Shanghai is now divided into 16 districts and three counties. There are 171 towns, 3 townships, 93 sub district committees, 3,30 neighborhood committees and 2,771 villagers' committees in the city. Area Map of Districts and Counties of Shanghai (2000).
Topographic Features
Except for a few hills lying in the southwest comer, most parts of the Shanghai area are flat and belong to the alluvial plain of the Yangtze River Delta. The average sea level elevation is about four meters.
Area
The city covered an area of only 636.18 square kilometers in 1949. By the year
1958, after Shanghai took over 10 counties from Jiangsu Province -- including Jiading,
Baoshan, Shanghai, Songjiang, Jinshan, Chuansha, Nanhui, Fengxian, Qingpu and
Chongming, the area under the city's jurisdiction expanded to 5,910 square kilometers.
The city had a total area of 6,340.5 square kilometers at the end of 2000, 0.06% of
China's total territory. The city extends about 120 kilometers in north and south and nearly 100 kilometers in east and west. Shanghai has an urban area of 3,924.24 square kilometers and rural area of 2,416.26 square kilometers. Its land area covers 6,219 square kilometers and water area runs 122 square kilometers. The city's Chongming
Island is the third largest island in China, covering an area of 1,041 square kilometers.
With a pleasant northern subtropical maritime monsoon climate, Shanghai enjoys four distinct seasons, generous sunshine and abundant rainfall every year. Its spring and autumn are relatively short comparing with the summer and winter. In 2000, the average
55 annual temperature was 17.6 degrees Celsius. The city had a frost-free period of 300 days a year, and received an average annual rainfall of 1,302 millimeters. However, nearly 50% of the precipitation came during the May-September flood season, which is divided into three rainy periods, namely, the Spring Rains, the Plum Rains and the
AutumnRains.
Table 2.2. Shanghai's Monthly Average Temperature and Precipitation.
Monthly Average Temperature(C) Monthly Average Precipitation (mm)
January 5.4 109.9
February 4.9 57.7
March 11.3 108.0
April 16.6 55.0
May 21.7 116.2
June 25.3 155.4
July 29.5 32.1
August 28.5 163.8
September 24.6 109.2
October 20.l 152.7
November 13.2 124.0
December 9.4 17.9
Location
Shanghai is situated at 31'14' north latitude and 121 '29' east longitude. Bordering on Jiangsu and Zhejiang Provinces on the west, Shanghai is washed by the East China
Sea on the east and Hangzhou Bay on the south. North of the city, the Yangtze River pours into the East China Sea. It also assumes the central location along China's coastal
56 line. Thanks to its advantageous geographic location, Shanghai has today become an
excellent sea and river port, boasting easy accesses to a vast hinterland.
Employment
F 2000, Shanghai employed 7.4524 million people. Of the total, the state
enterprises and institutions hired 26.7%; 4.2% were employed by collectively owned
units; 7.8% worked in private businesses and 27.1% found jobs in firms of other
economic sectors. A total of 34.2% people were employed in the rural areas. In 2000,
427,800 people found jobs in the city's urban area. By the end of 2000, the number of
the unemployed reached 200,080 in the urban area, representing a registered
unemployment rate of3.5%.
Taxation
Foreign invested enterprises and foreign enterprises are liable to such kinds of taxes as corporate income tax, value added tax, consumption tax, business tax, vehicle
and vessel license tax, stamp tax, native farming and forestry produce tax, animal slaughter tax, city real estate tax and land value added tax in China. Customs duty is levied on imports and exports. Any individual working in the territory of China is liable to individual income tax.
(1) Corporate income Tax
Foreign invested enterprises (Sino-foreign equity joint ventures, Sino-foreign
contractual joint enters and solely foreign invested enterprises) and foreign
enterprises which have their organizations established in the Chinese
territory and are engaged in production and business are subject to corporate
income tax at a rate of 30% and local income tax at a rate of 3%. Foreign
invested enterprises in Pudong New Area are exempt from local income tax
until the end of year 2000.
57 The manufacturing type foreign invested enterprises in Shanghai pay income
tax at a reduced rate of 24%, and those in the economic and technological
development zones of Shanghai and Pudong New Area pay income tax at a
reduced rate of 15%. A 20% income tax shall be levied on the income
derived from profits, interests, rentals, royalties and other sources in China
by foreign enterprises which have no establishments in China. The above
mentioned enterprises enjoy a reduced income tax rate of 10% in Shanghai
(known internationally as withholding tax which is paid in advance by the
disburser). The enterprises which provide fund or equipment on favorable
terms or which transfer advanced technologies can enjoy further preferential
treatment in terms of income tax reduction or exemption upon approval of
municipal government.
(2) Value Added Tax, Consumption Tax and Business Tax
Previously, incomes of foreign invested enterprises derived from sales of
their industrial products, commercial retails, importation of goods,
transportation and other services were subject to the industrial and
commercial consolidated tax. The minimum rate was 1.5% and the
maximum was 55% (excluding tobacco and alcohol). On December 29th,
1993, a resolution was passed at the 5th session of the 8th National People's
Congress. It stated that before relevant laws were promulgated, the
provisional regulations Promulgated by the State Council on value added
tax, consumption tax and business tax shall be applicable to foreign invested
enterprises as of January 1st, 1994. In the meantime, the industrial and
commercial consolidated tax was abolished. If a foreign invested enterprise
established before December 31st, 1993 incurred extra burden due to the fact
58 commercial consolidated tax was abolished. If a foreign invested enterprise established before December 31st, 1993 incurred extra burden due to the fact that in lieu of industrial and commercial consolidated tax it started to pay value added tax, consumption tax and business tax, it can get a rebate for the extra burden it paid for a period of no more than 5 years within its approved operational period or for a period of no more than 5 years if the enterprise does not have stipulated operational period upon application by the enterprise and approval by the taxation authority,
(a) Value Added Tax
Enterprises or individuals who sell commodities, engage in repair
and maintenance or import and export business in the territory of
China are subject to value added tax in line with Chinese laws.
The standard rate for value added tax is 17%, but the rate for a
few commodities such as grain, cooking oil, running water,
forage, fertilizer, pesticide, and farming machinery is 13%.
(b) Consumption Tax
Product, processing and importation of the following 11
commodities in the territory of China are subject to consumption
tax: tobacco, alcoholic drinks or alcohol, cosmetics, skin and hair
care products, jewellery, fireworks, gasoline, diesel, automobile
tire, motorcycle and motorcar. Consumption tax is calculated in
two ways. One way is to calculate according to quantity (gasoline
is RMB 0.20 per liter). The other is to set tax rate according to
the price of commodities (the rate for motorcar with its engine
cylinder capacity under 2,200ml is 8%).
59 (c) Business Tax
Enterprises or individuals whose businesses are in the sectors of
transportation, post and telecommunication, finance and insurance,
construction. art, sports, entertainment, and services, or who transfer
incorporeal properties, sell immovable in the territory of China are
subject to business tax. Business tax rate is 3% or 5%. But the tax
rate for entertainment sector is 10% or 15%.
(3) Stamp Tax
Activities involving purchases and sales, processmg, contracting,
leasing, transportation, storage, loan lending, property insurance, technology
contract and property transfer vouchers, business account books and licenses
are subject to stamp tax. The minimum rate of a stamp tax is 0.005% and the
maximum is 0.1 %. For licenses and business account books (not including
the account books for stating funds), stamps shall be sticked on to each
piece. The price is RMB 5 a piece.
(4) City Real Estate Tax
The tax is levied at an annual rate of 1.2 % on the original value of the real
estate, after 20% is deducted therefrom. The tax rate is 12% if it is levied on
the rental income. The newly constructed houses, which are built by the
relevant foreign-invested enterprises themselves or purchased by the relevant
foreign- invested enterprises in Pudong New Area and Economic and
Technological Development Zones, shall be exempt from real estate tax for 5
years as of the month of completion of construction or purchase.
60 St. Gabriel's Library, Au
(5) Vehicle and Vessel License
Tax All the vehicles owned and used by foreign invested enterprises are
subject to this tax according to "The Interim Regulations on the Vehicles and
Vessels Operation License Tax". The tax rates are as follows:
(6) Individual income Tax
(a) The individual mcome, such as wages and salaries of
foreigner working in China shall be taxed at the following
progressive rates:
(b) Individual income tax shall also be levied on those who
have income derived from working in any of the following
service businesses in the territory of China: design,
decoration, installation, drafting, chemical analysis, testing,
medicine, law, accounting, consulting, giving lecture, press,
radio broadcasting, translation, examination and checking
of manuscript, writing, painting, sculpture carving, movie
and television, audio recording, video recording,
performance, display, advertising, exhibition, technical
service, introduction service, brokerage service, agency
service, and others. The income taxable each time is the
remaining sum of the income after RMB 800 is deducted if
the said income is under RMB 4,000. If the said income is
over RMB 4,000, 20% of the income shall be deducted and
the remaining sum is the amount taxable. The tax rate is
61 Economic Development
Since the introduction of its opening policy in 1990, Pudong has been playing an exemplary and spearheading role in creating new systems, industrial upgrading and opening door wider to the outside world. In 1990, Pudong' economic output value was only 6.024 billion yuan, but the figure soared to more than 92.052 billion yuan in 2000, up 5.3 times and representing an annual increase of 20.3%, which was 8 percentage points higher than the city's growth rate. In 2000, the output value of the districts secondary industry reached 48.734 billion yuan, up 15.3% from the previous year and the figures with its tertiary industry stood at 42.753 billion yuan and 19.6%, respectively.
2.5 Confectionery Business in China
Through steps to open its markets to international exporters, and to comply with
World Trade Organization (WTO) membership application requirements, global trade with China has changed significantly in recent years. Opportunities are available to foreign companies to enter the Chinese snack food market, with tax and land incentives offered to lure foreign business to China's special economic zones, and tariffs lowered to invite imports.
The snack food market in China is substantial, although it is not fully developed.
While traditional Asian snacks are popular among older generations, particularly during special celebrations, festivals and other social gatherings, younger generations have developed a taste for imported Western-style snacks, creating a growing market for these snacks. Until the July 1997 reunification of China and Hong Kong, market statistics were reported independently, therefore portions of this report will refer to
China and Hong Kong statistics separately, though it is now a single market.
62 The total snack food market in China was valued at $3.8 billion in 1997, which included eastern-style snacks and western-style snacks. This report will focus on western snacks, which are further divided into three sectors: sweets, savoury snacks and frozen snack foods. The savoury snacks sector in mainland China in 1997 was $98 million, while sales in Hong Kong reached $178 million. Total sales figures for each of the sectors are difficult to obtain due to differences in the definition of "snack foods," and subsequent inconsistencies in reporting of these figures between countries.
Growth in the snack food market is expected to continue over the next few years, with some sectors estimated to grow by as much as 120% by 2002. While Chinese market concentration is low in comparison with European or North American markets, it is expected to experience amalgamations and mergers in the long term, leading to a select few brands holding up to 50% of market share. Currently, good opportunities exist for foreign companies that are willing to enter the market through joint ventures with
Chinese counterparts. Among those products forecast to be particularly successful are those targeted toward health-conscious consumers.
Boasting a population of more than 1.2 billion, China's place as the world's most populated nation is driving interest among companies from around the globe. However, due to socialist economic principles traditionally practiced by the Chinese government,
China remains a relatively new market for international exporters looking to explore opportunities in foreign markets. More recently, China has adopted a fundamentally free market approach to resource allocation, while retaining indirect regulatory control.
China's economy is doubling every eight years, and its GDP quadrupled between 1980 and 1995. Real GDP growth reached 9.7% in 1996, slowing to 8.8% in 1997. Although official estimates put 1998 GDP growth at 8%, it is more likely that growth will slow to
7%. China is increasingly active in the world economy, ranking as the world's 11th
63 largest trading nation before the Hong Kong reunification. The nation accounts for 2% of world trade, and foreign trade accounts for 35% of its GNP.
The Chinese government is moving towards balanced growth, with trickle-down expansion from the rapidly growing eastern seaboard economy moving toward the interior. During the Ninth Five-Year Plan (1996-2000) period and thereafter, China hopes to attract investment into the interior of the country from foreign and domestic sources.
China's snack food market, which features a wide variety of products, was valued at $3.8 billion in 1997. Two distinct categories emerge in this very competitive market:
Eastern-style traditional snacks and Western-style snacks. Eastern-style snacks, which tend to be traditional, healthier options, include dried and preserved fruits, seeds and nuts, dried meats, and dried cuttlefish and shrimp. The favorite among older consumers, these inexpensive snacks are often used at social gatherings. Further divided between sweet and savoury, Eastern-style snacks are sold loose, and include inedible waste, such as a shell or pit. Some consumers find this type inconvenient when compared with fully edible Western-style snack foods. The focus of this report will be on Western-style snack foods, however one should not ignore market competition from Chinese-style snacks.
Western-style snack foods include chocolates, potato chips, crackers, cookies, popcorn, candy and ice cream. Typically purchased by younger consumers who are more attracted by taste than nutrition, these snacks are purchased for impulse consumption and are rarely served on socia1 occasions. They are usually packaged, and are therefore more expensive.
In addition to the sweet and savoury market categories, Western-style snack foods can also be categorized as frozen products. Snack food products are seasonal, with sales
64 of savoury and sweet snacks declining during the summer heat, and frozen snacks enjoying a boom. Increased sales for salty and sweet products are evident through
October, peaking at the Chinese New Year. During this same period, frozen sales drop off. Rice crackers hold a 40% overall share of the savoury snacks market. However, there is a significant difference between the northern mainland and southern mainland markets. In the north, less than 20% of the total sales are from rice products, while in the south, they captured half the market. Potato chips and vegetable puffs follow at 15% and 10% of overall sales, respectively.
The packaged savoury snacks market, excluding ethnic Chinese snacks, reached sales of $98.1 million in main land China in 1997. More than 95% of the sales volume was in packaged nuts, with peanuts comprising 84.3% of total nut sales. Packaged nuts, such as cashews and pistachios, accounted for nearly 90% of the import value of savoury snacks in 1997. Imports of this commodity increased significantly in the 1993-
97 period, rising by 195%. Sales of potato chips -- the most popular Western-style snack in China -- grew by 202% between 1993 and 1997, to reach $14. 7 million. This market is forecast to experience a 118% value growth rate between 1998 and 2002.
Total sales of savoury snacks in Hong Kong in 1997 were $178 million. Potato chips accounted for $73.8 million of that total. However, consumers in Hong Kong are becoming more health conscious. Therefore, healthier snacks may enjoy a larger market opportunity in the future. The Chinese snack food market is expected to continue to develop and diversify as more players enter in the coming years. Despite the presence of a large number of competitors, market concentration -- the market share claimed by leading brands -- is surprisingly low. This low-level market concentration demonstrates the immaturity of the snack food market, as well as the number of products competing for a share of the pie. It is both an opportunity for and a warning to companies that are
65 considering entering the market. While product proliferation and high growth rates may allow many brands to survive over the short term, mergers and amalgamation will likely reduce the number of brands over the longer term, bringing market concentration figures more in line with W estem markets.
66 III. PROBLEM DEFINITION I PRODUCT SITUATION
3.1 Background of Products
Thai Sweet Candy Co.,ltd. was incorporated on February 26,1975 with initial registered capital of Baht 2.0 million, located at Charoen Nakorn Road, Bangkok. The following year, the company started its operation in the new factory at Thakarm Road,
Bangkhuntien, Bangkok. Foreseeing the growth of the market of instant foods of snack type, the company introduced modem technology from Japan and Germany. Therefore the company increased its capital gradually with the objective of expanding the operation by investing modem and highly effective machinery and equipment to increase lines of production. As a result, the products of the company were of high quality and accepted by consumers and more variety products were introduced.
The overall picture of confectionery indicates a high competition. Emphasis is made on product quality and conception of new products. Advertisement plays an important role on product launching promotion. Packaging makes the product stand out and attracts consumers with its gift-like feature suitable for different occasions.
At the present, product expansion focuses on biscuit, wafer, snack, candy and jelly. The Company invested in new machinery and in the import technology for its product development, capacity increase and efficiency thus responsive to market expansion. In line with United Food's policy of continuous and expansion, the
Company kept on thinking of new products to offer the consumer particularly in the premium class in order to expand our market shares in the middle and upper class. After careful research and analysis, Thai Sweet Candy Co.,ltd launched a new product early this year.
"Sanghai" brand coated wafer of Malt flavor. This flavor is in addition to the four flavors (Chocolate, vanilla, milk and strawberry) we have for the well known wafer 67 "Sanghai" New products are being developed every now and then to add variety and cater to the consumers' diverse preferences and tastes. The Company is determined to manufacture premium grade products both for the domestic and international markets.
Thai Sweet Candy Co.,Ltd will redouble its effort to improve its products and raise their positioning on Thailand's domestic market in preparation for a campaign to penetrate not only the Asian market but also European and American markets as well.
The Company has already succeeded in entering other South Est. Asian Markets.
Between 10-15% of its total output was exported in 1999. The Company has set a bigger export target for this year for its total production output. With the help of dedicated management and staff, Thai Sweet Candy Co.,ltd will certainly achieve this goal.
Thai Sweet Candy Public Company Limited, a producer of many instant foods of snack type. The first product of the Company is "Sanghai" brand coated wafer. In addition to the wafer, there are other products such as snack, candy, jelly, chocolate, bakery and biscuits.
Products of Thai Sweet Candy Co.,ltd are grouped as follows
Wafer:
"Sanghai" brand coated wafer of chocolate , milk, strawberry and malt flavours.
"Sanghai" Big Bite brand double coated wafer of chocolate/chocolate and vanilla/chocolate flavours.
Production of wafer needs high investment of machinery to achieve good quality. As pricing among other manufacturers is observed at the same level, competitors are a handful. Though new faces exert their interest in this market, they are aware of difficulty in achieving a break even point with a high investment cost.
68 CHCK:OlATE STRAW13ERRY VAN!LLA
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Figure 3 .1. Wafer Products.
Snack:
Potato crisp made such as salt, sour cream and barbecue flavour "Idaho" brand.
Com made "Toro" brand popcorn.
Potato crisps such as salt, tomato and pizza flavour "Chip Chap" brand.
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Figure 3.2. Snack Products.
69 Candy:
Hard Boiled Candy, Candy such as "Sanghai" brand Plum candy, Fruit candy of
"Starlet" brand, "Mr Nut" brand, "123 Zaa" brand, "Buggy" brand and "V-Love" brand.
United Butterscotch candy, United Coffee candy.
Soft Boiled Candy, Candy such as "Sakara" brand milk, strawberry and lemon flavours.
With low cost of production and simple manufacturing process , candy needs to excel in flavoring and attractive packaging. As competition on candy products is increasingly intense, new candy product with quality as well as its advertising war may be highlighted.
3D T/illLETS lOOTi\.llLETS
8 852047 217413 fl 8.52047211il 8 8 852047 2ll213 1X24X5-0 24.5X38X2.iJ cm. 1X6X'.100 275X41X24.5 cm. ]X24Xl00 26X3S:XUi cm.
Figure 3 .3. Candy Products.
Jelly:
Gummy jelly "Yoyo" brand with fruit flavours , Jelly beans "Tommy" brand with fruit flavours, Carrageenan Jelly dessert "Fancy Jelly" brand with variety fruit juices in fruit shaped packs.
Mix fruit flavoured water ice "Polar" brand
Carrageenan Jelly dessert "Mota Jelly" brand with a variety of fruit juices in a candle like shaped packs.
70 Dry jelly finds its production cost with high complicated process. Developments on flavoring and packaging appeal constitute the edge of competition. Growth in dry jelly market is featured with import of high priced dry jelly and new technology in production.
Figure 3.4. Jelly Products.
Chocolate
"Choco" brand coated wafer of chocolate
Chocolate filled with biscuit, raisin, jelly and peanut "Woody" brand
Chocolate filled with almond "United" brand.
Competition of the all-time popular products stages both the import and locally produced chocolates. Domestic productfon of chocolate has increased with its competitive price. Access to increase a market share arises if flavoring would be improved to match those of international standard.
71 Figure 3.5. Chocolate Products.
As one of Thailand's largest manufactures of confectionery products with over 15 years of outstanding track record, Thai Sweet Company takes pride in its self imposed responsibility toward the consumers. Its total commitment to quality is evident in all stages of its production process from the selection of fresh ingredients to hygienic packaging beautifully designed not only meet the market demand but also appeal to consumers.
Five years ago, the company implemented an ambitious program to improve efficiency in all aspects of its operation with the aim to maintain its leadership status in the market. To achieve that, the company singles out popular products with high profit margins from among its more than 100 products for further improvement. United products decided to discontinue some of its less favoured products altogether. At the same time, tighter control has been imposed on the development of new products.
In addition, the company has also overhauled its organizational set up as well as carried out a human resource development program to increase efficiency of employees at all levels. Responsibility toward the consumers is evident in all stages of Thai Sweet
Candy Co.,ltd production process characterized by stringent control on the quality of ingredients in conformity to respective recipes. The company closely monitors its products evens after they leave the factory and is receptive to suggestion on ways to further improve their quality. Thai Sweet Candy Co.,ltd also continues its intensive
72 research to develop new quality products to meet consumer's demand. The aim is to upgrade Thai Sweet Candy Co.,ltd products to premium-grade goods in preparation for the intensifying competition in the domestic as well as international market.
3.2 General Statistics and Main Types of Confectionery in the Market
As of the end of 1997, there were roughly 1,200 enterprises above the township level in China registered with a business license to manufacture confectionery. Their total production output for the same period, according to figures from the China
National Food Industry Association, was 595,000 tons of sugar confectionery (including chewing gum) and 40,000 tons of chocolate. According to China's Statistical Bureau, the total sales revenues of the 798 confectionery manufacturing enterprises with independent accounting in 1997 were RMB 6.2 billion yuan (or roughly USD 747 million). Independent research, though, indicates production numbers are even higher due to the additional output of the difficult-to-account-for township and village enterprises engaged inlow-end confectionery production. Candy manufacturers in China are commonly located within or in the vicinity of large cities, such as Beijing, Shanghai,
Tianjin and the major provincial capitals. But overall, there are two traditionally distinct geographic areas in which confectionery production is concentrated. The most prominent confectionery region is Shanghai, with close to 300 enterprises engaged in pastry and sweets production employing over 30,000 people and generating output value of over RMB 4.7 billion yuan (or roughly USD 566 million). Shanghai is also the most developed candy and chocolate consumption market in China, renowned as the home of the oldest Chinese food manufacturing factory, the Guan Sheng Yuan group, originally founded by a private entrepreneur over 80 years ago. This is also where
White Rabbit, the best known Chinese brand of candy, is made. The "Made in
Shanghai" label for a confectionery product, especially a domestic one, has a brand-
73 name-like importance, almost automatically elevating it to a class above other local products. The other region is Fujian and Guangdong provinces, where cheaper, bulk generic candy, widely found across the countryside market, traditionally comes from.
This is also the home of distinguished generic candy makers Xu Fu Ji and Lin Jin Ji.
In recent years, newly established joint venture confectionery manufacturing facilities have also been concentrating around the cities of Shenzhen, Beijing, Tianjin, either because of proximity to major markets or to take advantage of government preferential policies offered to foreign invested companies. The Chinese market bursts with an enormous diversity of confectionery products on display, particularly at the mid- and low-end of the price range. A wholesaler's booth in an average city or town would normally have a minimum of 20 types of candy displayed. But there are several major types of confectionery, both traditional and recently introduced from abroad, that have come to dominate the market. Below are the most popular types of candy mainly positioned at the mid- and high-end of the market spectrum:
(1) creamy toffee
(2) hard (sugar boiled) candy
(3) soft candy
(4) chewing gum
(5) nougat candy
(6) gummy candy
(7) lolly pops
(8) chocolate bars
(9) chocolate candy
(10) chocolate wafers
(11) chocolate-covered nuts
74 (12) jelly candy
( 13) marshmallows
3.3 China Confectionery Imports Estimate
As with any other commodities in China, it is quite difficult to quote reliable and accurate import statistics for confectionery. Tables 1 and 2 below are based on a consolidation of the Chinese Customs figures and Hong Kong External Trade statistics.
Although import duties on confectionery are rather low (15% for sugar confectionery and 12% for chocolate) only a fraction of imported products enter China through legitimate channels. Over 84% of sugar confectionery and 60% of chocolate imports into China enter through Hong Kong, unaccounted for by Chinese Customs.
This is particularly true for cheaper no-brand Southeast Asian products as well as higher-end European products with some brand recognition in China. Most leading sources of imported sugar confectionery ship in the vast majority of their products through Hong Kong's gray channels: Korea -95%, Malaysia - 88% and France - 80%.
Most of the popular European chocolate products come in the same way: Italian - 95%,
Swiss - 80%. In contrast, American, Australian and Belgian chocolate importers tend to invest more in their brand name, develop a longer term marketing strategy and bring in most of their products, 84%, 72% and 54% respectively, directly through legitimate channels.
As these latest numbers clearly show, the 1997-98 economic slowdown in China has taken its toll on the domestic confectionery market, with both sugar and chocolate confectionery imports shrinking by more than 15%. Furthermore, the Asian crisis has
severely affected Southeast Asian confectionery exports to China. Under such difficult market circumstances, the apparent success of Korean, French and Canadian sugar
confectionery, as well as that of American, Belgian and German chocolates, is of even
75 greater significance and suggests a strong long-term potential for these products. Based on this, some experts say that niche markets for high-value, quality-imported products are still expanding, despite China's depressed economy and overall slump in the consumer market.
Table 3.1. China imports of Sugar Confectionery(non-chocolate) by Country of Origin.
Rank Country 1996 1997 1998 1997-1998
Change
(Millions of US Dollars) ( % )
The World 92.05 96.07 81.39 -15.30%
1 Korea 22.76 32.81 36.95 12.60%
2Malaysia 15.13 14.77 8.94 -39.50%
3United States 4.48 4.96 4.86 -2.00%
4France 3.99 3.49 3.94 12.90%
51ndonesia 6.88 4.32 3.68 -14.80%
6Turkey 4.13 3.75 3.12 -16.80%
?Thailand 4.95 5.25 2.75 -47.60%
8Canada 0.09 0.92 2.01 118.50%
9Hong Kong 8.01 4.52 1.93 -57.30%
10 Japan 2.05 2.9 1.91 -34.10%
76 -----~
Korea D Others 28°/o •Malaysia
•Indonesia []Korea 5% 45% D United Sates
D France D France ~/ 5% ) D United Sates •Malaysia 6% 11% Others
Figure 3.6. Market Share of the Top Five Countries Exporting Sugar Confectionery to China in 1997.
Table 3.2. China imports of chocolate confectionery by country of origin.
Rank Country 1996 1997 1998 1997-1998
Change (Millions of US Dollars) ( % )
rrhe World 23.07 29.21 23.5 -19.50%
1 Italy 10.14 12.05 10.26 -14.90%
2 UnitedStaes 2.94 4.58 4.88 6.60%
3Australia 2.37 4.28 2.2 -48.60%
4Belgium 0.51 0.73 1.64 124.70%
5Switzerland 2.54 1.87 1.29 -31.00%
6Germany 0.28 0.38 0.54 42.10%
?Malaysia 0.79 1.12 0.42 -62.50%
8New Zealand 0.33 0.26 0.39 50.00%
9Hong Kong 0.76 0.65 0.36 -44.60%
10 Singapore 0.09 0.66 0.25 -62.10%
77 Swizerland Other 5% l Belgium_____---; •United Staes 7% Australia Italy D ------4.f/o D Belgium Australia 9% United Staes • Swizerland 21% [g] Other ------ Figure 3. 7. Market share of the top five countries exporting chocolate confectionery to China in 1997. 3.4 Key Market Drivers in the Confectionery Industry Candy is a traditional product in China. For Chinese people it is much more than one section of the food pyramid. Children and young women, who account for the majority of overall candy consumption, are the primary targets of confectionery manufacturers and retailers. New candy products come bundled with toys and other collectibles. In-store displays and POP materials are designed to attract kids, girls and young women. The traditional saying goes: "Girls eat candy and snacks, guys smoke cigarettes and drink alcohol" This is largely true for the present active adult population of China. But many marketing managers in the confectionery industry are willing to challenge this conventional wisdom. They argue that today's men grew up with no quality confectionery products to enjoy. That is why these managers are eagerly targeting young boys and girls alike, so that their products may become childhood favorites. And the kids are likely to continue 78 to consume the same brand or flavor when they grow up. One interesting exception to the above rule is menthol drops, the best-known brands being Ricola and Fisherman's Friend, which are identifiably white-collar male products. They have had a consistently stable market in China's big cities over the past several years. While similar consumption and market trends can be observed in the snack food sector, candy occupies a special place in Chinese traditional culture. It is a gift item of choice. When Chinese visit family and friends, particularly during holidays like National Day (October 1), Labor Day (May 1), Children's Day (June 1) or New Year's Day (January 1), the most common gift they bring for the hosts is candy or chocolates. Traditionally, this was loose toffee or hard candy that ended up on the host's dinner or tea table. Now with the slow but sure acceptance of chocolate and the technological and marketing advances in the domestic confectionery industry, candy gifts also include a wide variety of products such as chocolate bars and boxes, soft candy, gummy candy, jelly candy and toy packages. According to industry insiders the gift candy sub-sector is growing at notable rates, with more high-end luxury products introduced to and accepted by the market. During the Chinese lunar calendar New Year, or Spring Festival (usually falling between mid-January and mid-February), this tradition of giving candy as a gift and buying enough to put on every table at home is brought to its annual extreme. The month before Spring Festival is the zenith of the high season for all confectionery manufacturers, and during the several weeks of pre-Chinese-New-Year sales many of them record up to a third of their annual revenues. Another major driving force in the confectionery industry is the Chinese tradition of giving out candies to all the guests at a wedding. This tradition has practically created a niche sub-sector of the candy industry, the xi tang or "happy candy". Again, 79 historically the xi tang was a pocket-size sachet pack containing eight pieces of toffee or hard candy. It is imperative that the principal color of the package is red (some yellow is allowed) and features the auspicious Chinese character for "double happiness" as its central design element. One pack of xi tang for each guest is placed on every table during the reception, and packs or pieces are given out to neighbors, relatives, colleagues and friends. This market is still dominated by the old traditional Chinese brands like White Rabbit and WoWo, but has recently been invaded by most joint venture or foreign licensed brands. For example, a Shanghai company producing butterscotch candy under license from the Italian company Perfetti has introduced an original xi tang package - a red and yellow paper box with 8 pieces of candy inside. Dove chocolate and Hershey's have both introduced new xi tang products. Overall, xi tang is a handy addition to a brand's product range, offering great exposure, and generating decent supplementary revenues during the two popular wedding months - September and May. The most recent trend among confectionery consumers is their rising health awareness. Mothers concerned about their children's dental health are careful not to let them eat too much sugar. Young women increasingly abstain from food products high in calories. This is hurting some of the traditional confectionery producers, buton the other hand, creates an opportunity for quality low-fat, sugar-free foreign products. 3.5 Confectionery Consumption Trends In many ways, Chinese people remain very traditional in their confectionery consumption habits. Candies are still one of the most common gifts that Chinese people exchange, particularly during traditional holiday seasons. Wedding candy, or xi tang, is the inevitable customary fixture of Chinese wedding ceremonies and rituals. Children, young girls and women, who according to industry experts consume over 80% of all 80 candy in China, continue to be the pnmary marketing targets of confectionery manufacturers and distributors. Historically, candy only came in bulk form and various styles of packaged confectionery have only been introduced to the market in the last 10 years. Bulk candy, which is perceived as cheaper, is still widely sold to retail customers, to the extent that some department stores tear open Hershey's fancy packs and dump the chocolate kisses in the bulk candy bins because it sells even better there. However, as ordinary Chinese people grow better off, they are becoming more selective and cognizant of quality confectionery products, primarily introduced through imports. Modem foreign packaging and marketing concepts are being applied to lure more Chinese customers. Fancy packages, gift packs and luxury items are widely available in stores and preferred by many customers to cheaper products. Chinese customers strongly believe in the link between brand name and quality, and, once they choose a favorite brand, they are generally very loyal to it. An interesting side effect of this is the modest emergence of cross-branding marketing techniques domestically. Established brands are introducing products outside their traditional range or are being bundled with other brands in a different but related sector.Rising living standards and the Central Government's one-child policy have resulted in a strong trend towards healthier and more nutritional diets. Mothers are trying to limit the amount of sugar their child consumes, concerned about his or her dental health and overall fitness. They are also trying to secure an adequate intake of vitamins and minerals for the child. This has created a market for a new wave of healthy products in the confectionery sector. Sugar-free candy, vitamin C candy and products with added vitamin A, D and calcium are very popular in the market place. Perhaps the most significant and clearly noticeable development in Chinese confectionery consumption is the advent of chocolate. This is still happening slowly and on a relatively small scale, and some old habits or customs 81 are in the way of this process. China's chocolate market is still smaller than Japan's or Korea's and its per capita consumption of chocolate confectionery is just a tiny fraction of that of Hong Kong or Taiwan. Yet, as the above numbers show, the growth rates are impressive and the room for expansion is enormous. All this makes China an important potential market and an attractive one to foreign chocolate manufacturers. 3.6 Distribution Channels for Confectionery Products in Republic of China The distribution and handling system for domestic confectionery products, particularly the more traditional ones, is well established and varies little from city to city. Below is a simplified flowchart describing the main distribution channels in the confectionery industry. Traditionally, confectionery manufacturers are located in close proximity to their major consumer market. Thus, historically, Shanghai had the highest concentration of sugar candy and chocolate producers, but now many joint-venture facilities are being built around Beijing and in Guangdong province. A domestic producer is generally able to handle distribution within his home city and surrounding areas. Most manufacturers, using their own sales force, distribute directly to local retailers, concentrating on the large department stores, food stores and supermarket chains (falling under the A, B or C category of retailers). Only a few confectionery producers distribute to "Mom & Pop" stores (or D stores), which is locally referred to as "direct sales", or sign up an agent to do it for them. When a confectionery manufacturer expands his market to a remote city (or one outside his local distribution capability) he normally signs up a distribution agent to cover the entire city market. A distribution agent is either a state-owned or privately controlled company whose main job is to sell, distribute and sometimes market the manufacturer's products within the retail (and occasionally wholesale) market of one city or region. Most distribution companies require exclusivity for the area they cover. 82 Distribution agents generally work to target the city market and cover the full spectrum of retailers. Most agents are themselves food retailers or have a retail subsidiary. They own or have access to warehouse facilities and keep a rolling stock of their main products. They own their own vehicles and deliver directly to the retailers. Depending on the product's performance and popularity, distributors may pay up-front for stock or may only accept a product on consignment. Sometimes regional agents go on to sign up separate city sub-agencies that operate in the exact same manner as described above. Large volumes of confectionery products still move through the traditional wholesale markets, heading mainly to the smaller towns and the rural countryside. Foreign brands and imported products are still relatively uncommon in these markets, but their growth potential is considerable. A designated wholesaler is generally a private company such as a large successful wholesaler, whose main job is to sell and promote the manufacturer's product at one wholesale market. Manufacturers generally appoint a designated (or primary) wholesaler, either one per city, if the city is a bigger one and its markets cater to different non-overlapping localities, or one per wholesale market. Most smaller cities move all of their consumer goods through a single major wholesale market. The designated wholesaler gets preferential discounts and money incentives based on performance, have limited storage facilities, and rarely own any delivery vehicles. Sometimes manufacturers rent or buy a stand in the major wholesale markets of their home city and act as their own primary wholesaler, although this is rather uncommon. In bigger cities, designated wholesalers may sell to some smaller retail shops if they do not overlap with an existing distribution agent. In smaller cities, the designated wholesaler acts as a de facto distribution agent. But the primary wholesalers' major customers are the so-called secondary wholesalers. They are relatively small private 83 wholesalers from surrounding towns and villages that buy all their products (food, beverage and consumer goods) from the same city wholesaler. They drive all the way in their own or rented truck and take home a truck-full of different products. For the ones that have not figured out transportation in advance, wholesale markets are encircled with private trucks of all sizes, ready to bargain, load and deliver. Secondary wholesalers generally sell to small local retailers of the Mop & Pop caliber, although sometimes their products go onto tertiary wholesalers in even smaller localities. The retail price formation formula varies significantly for different products as they move through the above distribution channels. Generally speaking, lower-value bulk confectionery products are modestly marked up by manufacturers and wholesalers and rely on large volumes to achieve profitability, whereas high-value, imported or gift products allow for generous mark-ups at each stage of the distribution chain. In the most common case of successful mid-end local or imported candy, primary wholesalers add roughly 5% mark-up, while designated distributors and secondary wholesalers add in the range of 5-10%. In addition, all manufacturers offer performance-based incentives, in the form of cash or gifts, usually awarded at an annual distributors conference. Such incentives can be as much as another 5% of total annual sales or collections. From there on, as a matter of rule, retail outlets add a 25-30% mark-up on top of their purchasing price, with well-known department stores and some small Mom & Pop stores going as high as 50%. Every supermarket, department store or food store also charges a one-time listing (or slotting) fee for adding a product to one of their categories. For Shanghai, this is in the range of RMB 3,000 to 8,000. In addition, any special merchandising, display or advertising at the store comes at a price generally negotiated on a case-by-case basis. All successful distributors prefer to work with high value premium and imported products, since the profit margins are much higher than 84 those of traditional local products. This is, of course, provided that the manufacturer or importer backs them with adequate marketing support to make the product a success in their particular region. In the case of imported confectionery, product is first handled by the regionally appointed Chinese importer, who is usually only responsible for bringing in the product, clearing customs and other import formalities, labeling it with the hygiene inspection hologram, storing and delivering it. Then the foreign exporter chooses a city or regional distribution agent. This agent often also represents an array of domestic confectionery and snack food products. The more active exporters, like Hershey's, establish a local representative office that assumes the responsibility for all marketing support and strategic planning for the imported product. The distribution agents are only responsible for meeting sales and market coverage targets and making timely payments. Once the product is in China, it moves through essentially the same channels as its domestic rivals, so the above described distribution structure generally apply to imported confectionery, too. However, the better-organized companies, like Hershey's, require distributors to maintain strict standards for warehousing, shipping, handling and merchandising. They offer training, provide unified merchandising catalogs, and conduct regular performance audits of their distributors. Most imported products are priced too high or lack the necessary marketing support to effectively penetrate the second-tier cities, towns, and villages, so they only make it to the big city markets. But smaller cities and rural areas are slowly accepting more and more foreign products. 3. 7 Trends and Structural Patterns in the Confectionery Distribution System As a whole, distribution channels in China are underdeveloped, poorly managed and highly inefficient. Distribution and logistics remain the greatest challenges to manufacturers and importers of food products. Nevertheless, in the past five years 85 St. Gabriel's Library, Au distribution channels, and particularly the retail environment, in China have improved substantially. The advent of supermarkets, supermarket-type convenience stores, and lately hypermarts, has created a retail environment that is cleaner, better organized, more efficient and with dramatically improved capability of handling frozen, chilled and fresh foods. Department stores and traditional non-staple food stores are slowly adjusting and investing more in innovation in order stay competitive. Progress, although at a much slower pace, is seen in the way warehouses and delivery vehicles are being organized, equipped and managed. As a result of the better retail conditions, purchasing habits are slowly changing, too. Now that product is being handled properly through the improved distribution and retail channel, the seasons for products like chocolate and creamy toffee, traditionally restricted to winter sales only, are getting longer every year. Furthermore, the increasing number of foreign companies importing or setting up joint ventures to manufacture confectionery products has contributed to the rising level of sophistication and professionalism of product merchandising, marketing support and distribution management. 86 Confectionery Manufacturers Designated Wholesalers Distribution Agents Secondary Wholesalers 1. Mom & Pop Stores 2. Convenience/Grocery Stores 3. Department Stores 4. Food/Non-staple Stores 5. Supermarket/Chain Stores 6. Institutional Figure 3.8. Sales and Distribution Flowchart for Domestic Confectionery. 3.8 Imported vs. Local Confectionery The past several years have seen tremendous growth in the number of imported foreign confectionery products entering the Chinese market. Rising living standards and quality awareness of ordinary Chinese have allowed candy imports, perceived to be of better quality and value, into the market despite their higher price and limited popularity. Market penetration and effective distribution throughout China still remains an uphill battle for imported confectionery products. Table 10 below offers a simple comparison between local and imported confectionery products. 87 Table 3.3. Comparative Analysis oflmported vs. Local Confectionery. ocal dvantages Cheap consistent high quality Widely available erceived high value for money some brand recognition attractive/novel packaging customer loyalty strong marketing support Manufacturers can distribute and rendy ell directly istributors make good margins i h-tech, difficult to counterfeit Disadvantages ower quality, no consistency ew novel products and ow brand recognition innovative packaging styles o established distribution eak marketing nfamiliar or unaccepted taste iny margins for distributors ust go through local agent to import d distribute 88 III. SWOT ANALYSIS I MARKET ANALYSIS 4.1 SWOT Analysis of Thai Sweet Company to China Market Strengths Thai Sweet Candy Co., ltd has high quality products. We have been doing business for 30 years with a good reputation of Confectionery business in Thailand many years ago. R&D department develop new products and design colorful packaging to attract consumer. Especially Jelly product, we try to create many flavours and beautiful packaging to consumers. Also we have a variety of products that we can offer to consumer in order to cover the market. Consumer brand loyalty is moderately strong. Weaknesses Our products have high price when compared with competitors both domestic and foreign. Because of using local raw materials, it makes the cost of product higher than the competitors. Therefore we cannot compete with other companies. Due to insufficient information in China market, we cannot set marketing properly. Opportunities Snack market is to some degree "saturated". This means that any new entry company producing potato chips, dried fruits and chocolates, especially if the brand name is unknown, will find the process expensive and quite difficult. Nevertheless, a properly packaged and marketed product, which appeals to the consumers' whims and changing needs, can be successful. For example, with economic development, and better living standards Shanghainese consumers are more conscious of healthy snacks so, they look for more nutritious snacks. As a result, many companies have taken advantage of the revised labeling laws to advertise the nutritional value of their food products. For beauty conscious young women, calorie content has also become a rising concern. Marketing 89 snack foods that addresses this concern is an area that is non-existent in this market. Innovative companies could use this opportunity to make major market inroads. With high quality products, colorful packaging and variety of sweet products, we penetrate this market. Also Thai government have campaigns to support to enter new country especially China Market. We think that we have a chance to enter this market. Threats China market is a new market; Chinese people do not know our products. We think that it spends a lot of time to create customer's acceptance, also due to high customs charge and high Import Tax. It makes the price of our product higher than local competitors. The infrastructures in China especially sea transportation is just developing and; we believe that is our obstacle to delivery and distribute our product to China market. Also the main problem to enter this market is import license, only a few people have spent a lot of money and time to get this license from Chinese government. 4.2 Confectionery Industry SWOT Analysis in China Market China's market for confectionery products has undergone considerable changes in the past decade, mostly influenced by rising living standards and the influx of high quality products carrying foreign brand names. As a result, the domestic confectionery industry has been transformed dramatically, too. But there are a few characteristics of the market and consumer habits that are distinctive and unique to China. Below is a simple. Strengths (1) Higher living standards and health education are driving consumers towards better quality and imported confectionery. (2) The market for chocolate and high-quality imported candy has been growing steadily during the period 1992-97. 90 (3) Candy is a preferred gift item, traditionally presented at weddings, birthdays and New Year's celebrations. Weaknesses (1) The "traditional" sugar candy (toffee, hard fruity handy and soft candy twist wrapped or pillow packaged) market has been shrinking by about 30% for 2 years in a row. (2) Chocolate is still considered a "foreign" taste by most Chinese. (3) The market is distinctively price driven, both on the wholesaler and consumer level. (4) Candy is still a distinctly seasonal commodity. The saying goes: "Candy and liquor in the winter, ice cream and beverages in the summer" (5) There are too many producers in this very fragmented market. In the smaller cities and countryside, candy is almost a commodity item. Opportunities (1) Chinese producers have little or no R&D capabilities, so they are slow to introduce new/novelty candy products to the market. (2) Chocolate is capturing the younger, better off Chinese consumers m a significant way, both as a trend and as a new taste. (3) Innovative packaging, novelty candy and cross branding are very scarce and underdeveloped. (4) High-tech, good quality foreign products, which do not melt in the summer, can capture market share during the traditional low season. (5) Outside the big cities the market is very under supplied throughout the year, with a limited variety of quality candy products. 91 Threats (1) Counterfeit products appear in the marketplace as soon as a branded product is relatively successful. (2) A number of foreign chocolate brands have entered the market in the past 5 years and most of them have established domestic manufacturing. (3) Economic slowdown in 1997-98 is affecting the domestic confectionery market. ( 4) Local producers are already acquiring Japanese and Korean technology for products that have had successful pilot sales in the Chinese market. (5) Little brand awareness and loyalty, especially outside the cities, except for the old Chinese brands like White Rabbit. 4.3 Position Strategy Brand Positioning Brand recognition is the second most important factor for local consumers. Wealthy and young people are becoming acutely brand-conscious. This is particularly true in Shanghai because a variety of snack foods are already imported. But, there are still many foreign products, which are unknown to local consumers. Store managers, when asked for their input, advised that companies must support their products by having more advertising and local promotion. This requires foreign companies to pay · more attention to consumer education. For example, Taiwanese snack brands are very well known in the Shanghai market because they are dedicated to advertising their snacks. Commercials for their biscuits, Wangwang and Kangshifu, are often seen on the local TV channels. They also enclose small toys in their snack packages for consumers. As a result, their products are well known and sought after in the local market. As a position strategy, we will use Emotion strategy to set brand positioning. Emotion 92 positioning strategies move people to want things. Emotion create desire, and can be very powerful indeed. Positioning without emotion tends to be less persuasive and to lack motivation. Then this strategy is suitable for our products to create customer's desire. Thai sweet products stand for quality, delicious, colorful packaging. We position ourselves as high price, high quality product, and variety of products, different flavours to customers. After we survey competitors in the market, we found that mostly competitor's products are the same as our products, low price, they set shelf display to sell in bulk pack, and they do not have individual packaging. Product Positioning We set the positioning of the products in high quality, beautiful design of packaging with reasonable price for our target group. The emotion method is the way used to create product positioning. To make the product look delicious, good image, colorful packaging, look nice. We will use entertainment, fun to make good image for our brand. High Price *Thai Sweet Candy *Da Da /*M&M *Gold Monkey I * Wo Wo, Jia Jia --~~~~~~--+-~~~~~~~-- Low Quality High Quality Low Price Figure 4.1. Positioning Map. 93 4.4 Target Group The Shanghainese are among the wealthiest citizens in China, earning 70% more than the average Chinese. Most residents live in low-cost, subsidized housing and are all subject to China's one child policy, which results in more disposable income. There are reportedly over 100 million people in the coastal cities of China (including Shanghai) with annual incomes ofU$10,000 to $40,000. This number is expected to grow to 445 - 580 million people by the year 2005. Also, China is experiencing the "Little Emperor" phenomenon in which one child receives the exclusive care of two working parents along with two sets of grandparents. This means children receive a considerable amount of allowance, much of which is spent on snack foods. Therefore, many advertisements of snack foods are targeted towards children, usually through an attractive packaging. In general, people in the Y angzi Delta region (and China in general) prefers sweet confectioneries over salty ones. Even the popcorn available is of a sweet flavour. Sugar confectioneries accounted for over 97% of the total confectioneries consumed in China. Shanghainese are diverse in their tastes and preferences. The younger generations of Shanghainese are more willing to try new products and purchasing methods while the older generations tend to be more conservative and base their purchases mainly on price. To ensure the success of product sales importers need to consider issues such as price, brand, flavour, packaging, and tariffs. Therefore, We penetrate target group only in Shanghai area because it is one of the potential economic areas in China where people have high purchasing power and high education. They can accept new things easily. The target group will be people aged between 13-30 years old, living in city areas, educated in high schools. The reason we choose this age group for our product's because this group is teenager who like confectionery and have high purchasing power, they can afford to buy something they like if it is attractive. 94 4.5 Competitive Analysis and Market Shares The sugar confectionery and chocolate markets are both extremely competitive. There are numerous players on each level, particularly in the non-chocolate candy sector. The products range from high-value, fancy foreign products to simple, locally- made bulk candies of questionable quality. Experts seem to agree that there are good business opportunities at both extreme ends of the market spectrum. Selling large volumes of cheap candies to the smaller cities and countryside is big business for wholesalers around the country, but this market has so far proven to be well out of reach for foreign companies and their products. The high-value imported or joint venture products, on the other hand, offer good potential and generous incentives for distributors in a market that is growing steadily. The importance of brands in the confectionery industry is reaffirmed by the their visibly dominant market share. As shown by Table 4.1. Below, more than 50% of the non-chocolate confectionery market is dominated by the top three creamy toffee brands. Table 4.1. Top 6 Best-Selling Non-Chocolate Confectionery Brands in China for 1997. Rank Brand Name Products Market Share(%) 1 White Rabbit creamy toffee, hard candy, nougat 28.60 2 Wo Wo, Jia Jia creamy toffee, hard candy 20. 70 3 DaDa chewing gum 10.15 4 Wrigley's chewing gum 10.08 5 Gold Monkey creamy toffee, hard candy 5.20 6 Perfetti (Alpenliebe) butter scotch candy 3.50 Similarly, the top four best-selling brands of chocolate occupy over 50% of the market. 95 Table 4.2. Top 10 Best-selling Chocolate Confectionery Brands in China for 1997. Rank Brand Name Products Market Share(%) 1 Dove chocolate candy and bars 21.25 ~ Cadbury chocolate candy and bars 10.35 B m&m chocolate candy 10.08 ~ Le Conte chocolate candy and bars 8.59 l5 Jin Sha chocolate candy gift boxes 6.97 6 Shen Feng chocolate candy, bars 5.79 and gift boxes r7 Dah Chong Children's Food chocolate candy and bars 3.08 8 Kit Kat chocolate wafers 2.72 ~ Hershey's chocolate candy and bars 1.92 10 Wei Sha chocolate candy gift boxes 1.80 96 IV. MARKETING PLAN 5.1 Product Strategies Flavour When they first enter the Chinese market. Products that differ from domestic products will have problem. Many foreign manufactures have to make small concessions to local taste. The products were considered too sweet when it entered the Shanghai Market. As a result, local Chinese consumers did not welcome the chocolate and it had to be sold at a major discounted price. Extensive market and local taste research should be conducted before introducing any product with an unfamiliar flavour. Packaging The size of food packages also needs to be locally tailored. Most Chinese people do not own cars and live in small, crowded apartments with little storage space so, large western style economy packages are not desirable. Also Chinese people prefer individual packaged snacks in smaller packages, 30 grams of sweets is more suitable versus the 60 grams that are preferred in North America. Exceptions are made for gift packages that are commonly given to friends, relatives or business contacts. Such products are not marketed as economy packages but as gifts. They are very popular during the holiday seasons, especially during Chinese New Year and the Western Christmas holiday. Also, many consumers believe that there is a relation between packaging and the quality of the product. Comparatively, the Chinese will think that the quality of a product is better when they are wrapped in an attractive package. 97 Labeling On September 1st 1996, The Labeling Law took effect to regulate imports of packaged food products into China. As of this date, all food products (domestic and imported), at a minimum, must have a Chinese language label approved by the China Health Inspection Bureau with the following information: (1) Chinese name of the product (2) Food Ingredients (3) Date of production (4) Net weight (5) Shelf life/Expiry date (6) Method of Storage (7) Country of origin 98 I --- ~ ·--~---·· ______, - ~:o~ __ I___ =ri-:_a-~-~-:-e~~~~---·------==·------~~---.--..-. ___ -_ -- ~J'.,J',.;ftf.J.Lg # t> X.. ( Chinese) Food Brand and -----·------···---. -----l F~~.:::~-T~~J_E_ng_I~s_h_) __.. ______····- -·------··-----·! i H.S. Code r-DL,~( ~#- !'f' X.. ( Chin;s_e_) ____, ·----_._.. -~:=------~-- -_-_· .. ·-.-i Manufactu~er r:··:-----.. -·--· ..·-·-·---- me /address) *:y: ( ~r:g!~.--. ··------·.. ··------<' ~~ . I rDistributor , I ~~oc;n~!'!':n~!~alof T---····--·------··------···---1 I *~::~~ I -·· ·------... ____ .. _.... ·--· --· . -·I f lmportingc;":::;;7'"'~" I --L,....---· .. ·····--i~-i.i!.-'f-i'-~--(--)------·~ /-. ~;± __:!J.'~.Yirnt Applicati?l:'.. --· ..- __ --···-·Change Ce~~~ti-·o_n_A_pp}jcation ----i Remarks I 1··t~.i~1~4t-~-:6 Figure 5 .1. Samples of Labeling Application. 99 Importer and Manufacturer Other information may appear on the label, such as the English name of the product, manufacturer's address and number, type of food, nutritional content and trademark. However the Chinese language requirements (all in simplified characters) must be met. Labeling is necessary as a form of protection for local consumers. Local consumers can read package labels for nutrition contents and contact the distributors provided on the labels for product complaints, if necessary. This will also protect producers and retailers from fake, inferior, or expired food from entering the market. 5.2 Pricing Strategies Snacks are not regarded as staple foods and therefore, people are often not willing to spend a lot for them. According to a survey the local customers in Shanghai use price as the main determining factor to purchase an imported or local snack. Foreign snacks are more expensive than snacks made within the region. Some foreign companies intentionally set a higher price on their products to establish an "expensive and superior image" to local consumers. It is part of their marketing strategy. When the product's image is established the high price is reduced to generate sales. Since our pricing objectives are to earn a target return on net sales as well as meet competitor's prices, we will still use cost-plus pricing and setting the price in relation to our competitor. Our pricing strategies are compatible with the rest of the marketing mix. With price set, we are able to give customer discount, allowance deduction form the price list, quantity discount, trade discount and other type of deduction. 100 Table 5 .1. The Product Pricing. Cost of Calculation CIF (USD) 11,475.00 CIF (RMB) 95,127.75 Custom duty 12% 11,415.33 Total Cost (Not include VAT) 106,543.08 Purchase expenses 118,112.32 Include: apply to customs 124,655.40 Label print 5,762.50 Bar code 1,435.00 L/C Bank commission charge 1,800.00 Purchase expense 21,627.50 Total Cost (include purchase expenses) 136,728.00 Gross Margin Rate (%) Gross Margin Quantity 13 50*24 (package) 32,400.00 Unit Cost 4.22 Gross margin (33%) 2.08 Supply price (include VAT) 6.30 Suggest sales's price (21 %) 7.66 5.3 Distribution Strategy Our objectives of distribution strategy are to increase market coverage and the number of outlets as many as we can. We will use Intensive distribution methods to increase market areas and we will use pull strategy to market directly to consumers to build demand, forcing the outlets to stock the product. There are several ways that our products enter Shanghai's confectionery retailing stores. The following is a general structure. ( 1) Import/Export Company: These companies have an import license to import products from overseas. The local government foreign economic relations and trade commission issue import licenses. Products are imported directly from overseas or commonly via Hong Kong and Guangzhou where there are numerous trading companies specializing in 101 foods. If any import tariff is paid, the importer will pay for it on behalf of the distributors and/or retailers. Import companies look after the documentation and labeling requirements. Products are transported to Shanghai by truck, train or ship and sold to distributors/wholesalers or local agents. (2) Distributors/Wholesalers/Agents: Most wholesalers do not have their own import license so, they entrust a local import/export company the job of importing goods from overseas. Distributors who own their own import license import goods from overseas themselves. Most successful distributors have established local contacts and market intelligence. Once imported goods are in the country, wholesalers distribute the products to the retail outlets. Sometimes, a given product can have many wholesalers or a few. Retail outlets can be supermarkets, buyers who have kiosks at the local wet markets, high-end restaurants or hotels. Some retailers, like Japan's Yaohan and China's Orient Shopping Center, have their own import licenses but they do not use them very often to import products directly from overseas. Yaohan's management justified that it is cheaper to supply their products through distributors because these distributors deal in larger volumes than Y aohan is able to handle. In comparison, if Y aohan were to import goods directly from abroad, it would only be a small quantity, which is enough to meet the needs of their own chain stores. So, in terms of cost, it is not economical for Yaohan to import the products themselves. Also, supermarkets like Japan's Yaohan, Shanghai's Hualian and Lianhua and Hong Kong's Park N' Shop offer a large network of stores in Shanghai so, foreign snack manufacturers are assured the advantage of reliable and established distribution channels. The unique characteristic about distributors 102 or wholesalers is they can also market imported products with the assistance of retail outlets and financial support of the foreign company. (3) Converters: These are state-run enterprises with the import license in Southern China. They have the connections that allow them to bring products into the country, do whatever it takes to get the product cleared through customs, pay the tariffs, and then pass the goods back to the agent or distributor. Converters can exchange currencies, get products into a warehouse, and accept payment for a shipment without need for outside financial entities. This used to be a very prevalent method of distribution. However it is less common now especially within the last two years, and is not encouraged due to new government policies enacted by Premier Zhu Ronji. Buyers and Warehouses Buyers determine what products a supermarket will put on the shelves. Larger chain supermarkets such as Yaohan have their own local buyers who choose products on the basis of appeal and cost. Smaller supermarkets rely on their distributor's buyer. Managers interviewed say that different distributors often charge different prices, indicating there are no fixed pricing standards for products. Larger supermarket chains have their own warehouses where their distributors keep their products in storage. Products are shipped to the supermarket by truck, bicycle for smaller operations, especially during crowded traffic conditions. 5.4 Promotion Strategies Our Promotion will be set following other marketing mix program. Our promotion plan will target three parties, which consist of Trade shop, Consumers and Salesperson. Then, we will set specific promotion program for each target parties. Because China 103 market is a new market, we think that we have to promote our product in every channel in order to motivate consumer and attract prospected customers to buy our products as an initial step for promotion objectives of China market, we would like to introduce new products to consumers and to make trial purchase for consumers, and we wold like to create the demand of goods from retailers, and we would also like salesperson to contact and expand the distribution channel to cover the market areas. In order to accomplish the promotion objectives, the budget is very essential. We will use Bottom-Up approach, which set the necessary programs and details with cost for each program to the management level. Then we will set sales promotion strategies to promote our products, which include free gifts, Catalog offer and Exhibition to motivate Chinese customer's perception, to increase their need of our products. And we will use free samples, premiums, coupons to make product trial and make consumer switch to purchase our brand. And also we will use discount, free goods to our trade shops to increase sales volumes to our company. We will use new customers incentive and training to our sales teams to increase sales target and trade shop. For Point of Purchase, we will plan to set Point of purchase to promote our products in selected market area such as in super market, Lotus superstores. In our POP, we will set promotion program. To give sample free, special price, premiums in POP. 104 Sales Promotion Strategies I , ' Consumer Promotion Trade Promotion Sales Force Promotion -Price Off -Discount -Training -Samples -Free Goods -New customers incentive -Seminar -Free Goods -POP display -Premiums -POP display Figure 5.2. Sales Promotion Chart. 105 Figure 5.3. POP Display. 5.5 Advertising Strategy Thai sweet Candy Company will concentrate this strategy because the brand is new in this market. Consumer does not know our brand. Therefore, we have to use advertising strategy to create brand awareness and create brand recognition to the consumer. The Advertising of Objectives are informative and awareness objective which to create brand awareness which increase unaided awareness among the target 106 market 10%, to give information of our products to consumers, to create brand image and brand attitude to consumer, to create trial purchase of consumer. For the advertising strategy, we will use the advertising message to create the message for target group. The content of advertising message will be to make our product beautiful, colorful, make appetizing appeal, to make benefit and good taste of our products and to concentrate on brand name. The advertising strategy should include Promise, Support for this promise, and Tone of the advertising. The Promise of advertising message is to convince our target group that our product is very delicious, good taste. The Support for this promise is our product is the fun with Thai sweet candy. The tone of the advertising will be funny, colorful picture. Advertising Media Strategy, The advertising media plan will support the marketing plan in order to achieve our objectives. The objectives of advertising media plan are to create the first recognition of consumers, create brand awareness with our products. We will advertise to consumers according to our target group people age between 13-30 years old with living Shanghai City. We will use continuity schedule to advertise our product the whole year, and media Tactics will be repetition and domination to create consumer's recognition and select the popular media for our product make our product outstanding. For the Media Mix, we will use mix media including Television, newspaper, Radio to advertise our product in China Market but, we will concentrate Television media in order to cover our target market. It combines motion ,sound and special visual effects. Magazines are the medium we will use. We want our high-quality printing and color to be seen by our target group. Magazines can reach a national market at a relatively low cost per reader. Through special-interest magazines or regional editions of general-interest magazines, our ads can reach a selected audience with a minimum of 107 wasted circulation. Magazines are usually read in leisurely fashion, in contrast to the haste in which other print media are read. This feature is especially valuable to us with a complicated message. Magazines have relatively long life, anywhere from a week to a month, and a high pass-along readership. The magazines we will use are cartoon magazines, Fashion magazines etc. Radio makes only an audio impression, relying entirely on the listener's ability to retain information heard and not seen. We want our advertising to be seen and attractive to the target group. Therefore, radio advertising will not be used. Also, we will create our Website to consumers. The internet population is younger, more affluent, better educated, and more people to use internet, the cyberspace population is becoming more mainstream and diverse. The younger users are more likely to use the Internet for entertainment and socializing. Internet users in general place greater value on information and tend to respond negatively to messages aimed only at selling. They decided what marketing information they will receive about which products and services and under what condition. In on-line marketing, the consumer, not the marketer, gives permission and control the interaction. Therefore, our Website will provide information of our products under our Thai sweet Candy company and show our products to people. 5.6 Publicity Strategy We will use Public Relations to support our advertising strategy to make brand image and product image and also company image to make consumer's perceive. The objectives of publicity are to make brand image, good will of company, to stimulate the sales force and dealers enthusiasm. To inform the stories about our products before launching into China Market. The major tools in Public Relation strategy are to use Trade Show, Brochures, Catalogue and posters to promote our products. 108 5. 7 Personal Selling Strategy Our company will set personal selling teams to meet our customers both retail shops, specific chain stores that launch our products in their stores. We think that personal selling is a very important tool that incorporates the critical human factor into the marketing mix. Our Objective of this strategy for retail is to establish 70 percentage visiting retail shops within three months, to achieve a 60 percentage trial ratio of customers who actually try the merchandise during promotion period. To establish selling strategy, we will use territorial method for each sales representative is assigned an exclusive territory. We will set compensation, sales incentive such as commission to incentive sales teams and we will have training program to educate sales persons. 5.8 Marketing Budget and Marketing Calendar In order to accomplish our marketing plan, we have to set up the budget, we will develop budget to provide estimated costs associated with each marketing tool used in the marketing plan. Based on our experience, no matter what budgeting approach is employed, it seems there are never enough marketing money. For this reason, we need to determine priorities for the plan, along with corresponding executional costs for the various marketing activities. Then, based on the priorities and associated costs, pare back the activities to meet the predetermined budget level, striking a balance between what must be accomplished and what you can realistically afford. Ideally, you will be able to develop a budget that is realistic from a total spending standpoint and yet will provide the necessary resources to support a successful marketing plan. 109 Marketing Plan Budget Monetary Unit :00000 RMB Into the marketing fee sub-total RMB47.50* Include:into shop fee 20.00 Barco de 12.50 Open account fee 15.00 Advertisement expenses sub-total 37.00 Include:Advertisement (magazine) 2.00 3 times one month DM Fee (4times per year) 10.00 POP Fee 25.00 (Lighting Box and advertisement board 1,200x20) Promotion expenses sub-total 33.30 Include: Uniform of promotion man (10 staffx 300 RMB) 0.30 Promotion program -Consumer promotion program 10.00 -Trade promotion program 20.00 Sale with award 3.00 Transportation and storage fee sub-total 7.80 Include:Transportation fee 5.40 Storage fee 2.40 Estimate BudgetRMB 125.6 *Source: Courtesy of information from Shanghai C.P. Friendship Enterprise Development Co.,Ltd 110 V. EVALUATION OF MARKETING PLANS 6.1 Evaluation Plan After the marketing plans and budgets have been developed, the marketing and sales people will carry out the work according to plans. In order to evaluation marketing plan, we will use four marketing control methods to evaluate and monitor the marketing performance are: Annual-plan control, Profitability control, and efficiency control. Annual-Plan control has several methods but we will use sales analysis, market-share analysis to compare the performance before and after marketing plan begins Profitability control method will examine where the company is making and losing money, the approaches that we use are: product, territory, customer, segment, and trade channel. For Efficiency control will evaluate and improve the spending efficiency and impact of marketing expenditures. Efficiency control method includes sales force, advertising, sales promotion, distribution. Each month, a report has to be made to summarize previous month's sales figure. Secondly, the monthly report will also show the budget, or the expected sales of the product so that the marketer can compare the actual and forecast sales. We will then find out the reason for any deviation of actual sales from forecast sales. Then we will find the reason for it. We do not think that the plan will fluctuate much because the forecast sales are very realistic. In the second year of sales in department stores , we will not only compare the monthly actual sales figure with the budget but also compare the actual sales figure with the previous year' sales. This way we have a clear picture of what is going on with the sales of our products. Promotion program and special activities will be summarized in the report so that the market can have a clear picture of the reasons for sales increase or decrease. Every quarter, quarterly reports will be prepared. This report will summarize what is going on in that quarter. This report is 111 especially important when the sales are much lower than we expected. When sales drop we have to brainstorm to find out the cause of the drop in sales and also find the way, in our case, promotion and advertising to improve the sales so that the yearly sales will be according to our budget. After the first six months have passed, we will also make another report to adjust the sales figure and advertising and promotion budget to make the figure more realistic. After that we can prepare the budget for the next year. 6.2 Contingency Plan After marketing plan has already been executed and also evaluated the results, If the result is not satisfied by our management, we have to use contingency plan to support our main marketing plan in order to accomplish our objectives. We will make contingency plan which consists of Product strategy, Price strategy, Distribution strategy, Promotion Strategy, Advertising strategy. Product Strategy After we launched our product into the market and evaluate the result of consumer behavior. Next we will develop product lines, packaging in order to suit for Chinese people. We will improve product quality and add new products lines and also improve styling. We will add product of different sizes and flavours and also a larger product variety thus giving buyers more choices to select. We will offer and give warranty of product to consumer. We will try to make our products prestige goods in which we will offer consumer with higher quality products when compared with our competitors . For branding of products, we know that a brand is very in the amount of power and value they have in the marketplace. At one extreme are brands that are not known by most buyers. Then there are brands for which buyers have fairly high degree of brands awareness and then next step is brand preference. And finally there are brands that command a high degree of brand loyalty. Therefore, the first step to market our 112 product in China market is to create brand awareness. We will use advertising strategy and promotion strategy to create brand awareness. We will increase the degree of advertising and promotion to support our main marketing plan. Price Strategy The pricing marketing mix tool is one of the most difficult for which to develop a plan. The pricing of our product is critically difficult to determine because it must be high enough to cover costs and make profit for our company. In addition, the pricing of a product affects the product's positioning. The pricing plan requires flexibility, discipline, and judgment to provide for a pricing structure that is competitive, complements the product's positioning and maximizes sales and profits. Our pricing strategy for Contingency plan should support master marketing plan. Furthermore, Confectionery products, people are not willing to spend a lot for them. Our strategy is to cut price partly and raise perceived quality and also set the psychological pricing, we must give customers some price reduction, but stress higher value of offer to customers. We also use Price discount and Allowances and also special-event pricing to attract customers. We establish special prices in certain seasons or promotion period to draw in more customers. Distribution Strategy Our contingency plan for distribution strategy should support master marketing plan. According to our objectives of distribution strategy are to increase market coverage and the number of outlets. We still build intensive distribution channel , we think that we have to develop a new channel of distribution in order to increase market coverage for our products. We have to expand distribution channel to other new channels such as, wholesalers, supermarket, convenience stores, discount stores, 113 modem trade like Lotus, Carrefour. Here this is the list of distribution points that we would like to develop our distribution channels. Distribution Point Carrefour, Shanghai Carrefour, Ning Bo Carrefour, Nan Jing Carrefour, Wu Xi Lotus, Shanghai Lotus, Hang Zhou Hui Jin, Xu Jia Hui Pacific store, Xu Jia Hui Parkson store, Huai Hai Road Pacific store, Huai Hai Road City Supermarket, Huai Hai Road Hui Kang, Ritzcarlton Hotel, Shanghai City Supermarket, Gu Bei Ouchan, Shanghai Ouchan, Wu Xi Ouchan, Su Zhou Wholesale Distribution Point Ha Er Bing Kun Ming Nei Men Tian Jin 114 We expect that after we expand our distribution channels, we will have market share increase to 10 percent. Promotion Strategy In the contingency plan for promotion strategy, we still use Consumer-Oriented promotions and Trade-Oriented promotions. After master marketing plan executed six months period, we evaluate the result and performance. We will adjust the promotion program intensively in order to support other marketing strategies and also increase the sales volume. As the use of sales promotion techniques continues to increase, we must consider what we expect to accomplish through our consumer promotions and how we interact with other promotional activities such as advertising, direct marketing, and personal selling. When we implement sales promotion programs without considering their long-term cumulative effect on the brand's image and position in the marketplace, we often do little more than create short-term spikes in the sales curve. Consumer Oriented Promotion While the basic goal of most consumer-oriented sales promotion programs is to induce purchase of a brand, our objectives of using consumer promotion is to gain more trial and repurchase, increasing consumption of an established brand, defending current customers, targeting a specific market segment, enhancing integrated marketing communication and building brand equity. (1) Bonus Pack In consumer promotion program, we will use bonus pack which we will offer the consumer an extra amount of a product at the regular price by providing larger containers or extra units. We think there are several advantages to bonus pack promotions, First, they give our company a direct way to provide extra value without having to get involved with complicated 115 St. Gabriel's Library, Au coupons or refund offers. Bonus packs can also be effective defensive maneuver against a competitor's promotion or introduction of a new brand. (2) Price-Off Deals The price-off deal 1s to reduce the pnce of the brand. Price-off reductions are typically offered right on the package through specially marked price pack. We use price-off promotions because, First since price offs are controlled by manufacturer, it can make sure the promotional discount reached the consumer rather than being kept by trade. Price-off promotions can also encourage consumers to purchase larger quantities, preempting competitor's promotions and leading to greater trade support. (3) Event Marketing We also use event marketing which is a type of promotion where a company or brand is linked to an event or where a themed activity is developed for the purpose of creating experiences for consumer and promoting a product or service. We will use event marketing by associating our product with some popular activity such as a sporting event, concert, fair, or festival and also we will create our own events to use for promotional purposes. Our objectives are to increase the awareness of a company or product name, to build loyalty with specific target audience, to differentiate a product from our competitors, to provide merchandising opportunities. We will establish event marketing at school ,super market, Lotus, Carrefour and also trade shows such as Thai food fair in Shanghai. In event market program, we will set Point of purchase display which including goods for display, Poster, Symbol, Banner, Shelf-talker to attract customer's attention. 116 Figure 6.1. Sample of Event Marketing in China. Trade-Oriented Sales Promotion Sales promotion programs of trade is to market intermediaries for wholesalers and retailers include obtaining distribution and support for new products, maintaining support for established brands, encouraging retailers to display established brands, and build retail inventories. There are many varieties of trade promotion tools as inducements for wholesalers and retailers. These promotions include contests and incentives, trade allowances, sales training program. 117 (1) Contests and Incentives Manufacturers may develop contests or special incentive programs to stimulate greater selling effort and support from reseller management or sales personnel. Contests or incentive programs can be directed toward managers at the retail level. Manufacturers often sponsor contests for resellers and use prizes such as trips or valuable merchandise as rewards for meeting sales quotas or other goals. We plan to use this tool to give incentive to wholesalers and retailers to increase sales volume, We will use Product or Program sales, awards that are tied to the selling of a product, such as selling a specific number of unit, selling, we will give trips to Thailand for 7 days. (2) Trade Allowances Trade allowance is a discount or deal offered to retailers or wholesalers to encourage them to stock, promote, or display our product. We will use promotional allowances, we give retailers allowances or discounts for performing certain promotional or merchandising activities in support of our brand. We discount 5% from the lists of price when they order our product during the promotional period. Adverting Strategy In contingency plan, we think that adverting strategy is very important to our products because we have to increase brand awareness to Chinese people in order that they can recognize our brand and products. Our objectives of adverting strategy in contingency plan are to increase more brand awareness, product benefits, brand attitudes, make more trail to our products and also try to use product differentiation from our competitors. The advertising strategy, we will uses adverting strategy which is the 118 same as master plan, but we will use continuous program to create more brand awareness. The advertising message to create the message for target group. The content of advertising message will be to make our product beautiful, colorful, and make appetizing appeal, to make benefit and good taste of our products, to concentrate brand name. The advertising strategy should include Promise, Support for this promise, and Tone of the advertising. The Promise of advertising message is to convince our target group that our product is very delicious, and has good taste. The Support for this promise is our product is the fun with Thai sweet candy. The tone of the advertising will be a funny, colorful picture. Advertising Media Strategy, The advertising media plan will support the marketing plan in order to achieve our objectives. (1) Media Planning The objectives of advertising media plan are to create the first recognition of consumers, create brand awareness with our products. We will advertise to consumers according to our target group people aged between 13-30 years old living in Shanghai City. We will use continuity schedule to advertise our product the whole year, and Media Tactics, we will use fighting schedule which employs a less regular schedule with, with intermittent periods of advertising and non advertising. At some time periods, we will advertise heavily and we will stop short periods and we also use overlapping schedule which we will use Television when we are in best selling period and we will supplement media such as Magazine, Newspaper, Transit advertising when we are in low season period. Also, we will use to create our Website to consumers. The internet population is younger, more affluent, better educated, and more people to use 119 internet, the cyberspace population is becoming more mainstream and diverse. The younger users are more likely to use the Internet for entertainment and socializing. Internet users in general place greater value on information and tend to respond negatively to messages aimed only at selling. They decided what marketing information they will receive about which products and services and under what condition. In on-line marketing, the consumer, not the marketer, gives permission and control the interaction. Our objectives for established company web site are as follows (1) To provide in-depth information about company's products and service. In business-to-business markets, having a website has become a necessity, as more and more buyers expect our company to have a site providing them with detailed information about our products. (2) To create awareness, advertising on the Web can be useful in creating awareness of an organization as well as its specific products, We think that this is a another method to promote our product in China market. (3) To gather research information, The Web has been used by marketers to gain audience profile information. Our company uses it to establish and maintain relationships with our customers, to research the market place, and to gather competitive information. Therefore, our Website will provide information of our products under our Thai sweet Candy company and show our products to our target group. The style and pattern of Website must be designed to convince our target to visit. 120 VII. CONCLUSIONS & RECOMMENDATIONS 7.1 Conclusions While there is no "perfect" confectionery product for this market, many industry experts agree there are certain guidelines one can adhere to in order to identify prospective market winners. Consumption trends in the candy and chocolate industry are relatively short-lived, so innovation and product improvement are major driving forces of success in this market. Because of the limited research and development (R&D) capabilities of domestic Chinese manufacturers, foreign confectionery companies have a competitive edge in this market with their more advanced, high-tech and innovative products that have been developed and tested abroad over the past few decades. Chinese confectionery consumers are lured by novel and unique flavors, shapes and packages of candy introduced by foreign manufacturers. The downside is that these impulsive market fads only last for several months and local manufacturers are quick to come up with cheap counterfeits as soon as there is evident consumer demand. Nevertheless, a company, with their superior R&D base, have the opportunity to introduce such advanced, trendy products to the Chinese mass candy market and take advantage of the potentially high volumes of sales this could generate. Naturally, the best products will be the ones that are technologically advanced enough so Chinese manufacturer can not easily reproduce them. On the other end of the strategy spectrum is the long-term approach taken by many internationally renowned confectionery brands. Chinese consumers believe in foreign brands and the higher quality standards they stand for. International brand-name confectioners have a good opportunity in a vast, relatively "level-field" market, provided they are willing to adopt a more realistic 121 strategy and be prepared to incur operating losses in the first couple of years. This, according to almost everybody in the industry, is the right approach. However, it involves long-term commitment of considerable resources and major investment in developing the brand and the market demand for it. Rising living standards of ordinary Chinese people and the resulting health awareness have created a strong market for healthy and nutritious foods. This presents high-tech foreign confectionery products, featuring advanced health and nutrition qualities, with an excellent business opportunity in a large emerging market. Naturally, in all cases mentioned above, there are a number of particular elements that need special attention in order to plan for success. Pricing is probably the most important one. Price has to be controlled and fairly reasonable at least within the same category of products in the market. This is not to say that cheap products will automatically sell better, but consumers must be convinced they are getting good value for their money. Another important detail worth paying attention to is acceptance of flavors and packaging. Although Chinese consumers are generally open-minded and receptive to new intriguing tastes from abroad, there are certain products that remain unacceptable to their palate or cannot meet their hygienic perceptions. Thorough market research is always worth the effort before investing a lot in marketing and distribution of a new product in the Chinese market. 7.2 Recommendations It is probably very unwise to take any expert or amateur opinion on Chinese tastes and consumption habits for granted. A number of myths and popular beliefs of what Chinese people like or dislike have been proven wrong by the market in the past 10 years. Among these are the widely predicted rejection by Chinese consumers of coffee and chocolate as foreign tastes, and yet both are increasingly accepted and their 122 respective markets are growing. It is still useful, however, to have an idea of what qualities or features industry insiders think might make a confectionery product a potential success or failure in the market. Experts are unanimous that strong sweet taste is definitely "out" for confectionery products. Mothers are more wary of sweets damaging their children's teeth and young girls are more careful with their sugar intake. Many foreign candies and chocolates are perceived as "too sweet" by local customers. It is important to conduct taste and flavor tests before launching a product in the Chinese market. Strong bitter flavors, such as those of dark chocolate or licorice, are also having a hard time winning Chinese consumers over. Cinnamon is proving to be a less accepted foreign flavor, too. Chinese seem to prefer pure, milky and fruity flavors. Some industry insiders believe soft candies in general have a limited future in China. They are perceived to melt and deform easily and are widely regarded to be passe in the marketplace. While bulk is still a very popular way to sell candy to end users even in the big cities, bulk unwrapped candy is increasingly unpopular. Chinese customers regard candy which is not individually wrapped, even if it is packaged in bags or boxes, to be of lower hygiene standard. Companies should be cautious when launching unwrapped products like gummy bears, jelly beans and others, and be sure to survey a good sample of the target customer population. Successful chocolate makers, such as Dove and Hershey's, have all introduced bite-size chocolates sold in bulk (i.e. by the gram), but all these products, despite their small size, are either twist wrapped or pillow-wrapped individually. Finally, it is strongly advisable that a company should engage in detailed research, using taste test and product design surveys, to determine the probable acceptance by Chinese consumers of a new product, even when 123 7.3 Further Study for China Market After we collect primary data about confectionery market in China, we think that China is a new market. There are many obstacles for entering this market. We have a few information about China market especially consumer behavior, the regulation and law to import confectionery products into China. We think that we need marketing research in China as follows: ( 1) Consumer Behaviors of Chinese people. (2) Tastes and preferences of Chinese people toward Thai confectionery products such as flavors , type of confectionery products , packaging , price. (3) Law and Regulation of the government of China for importing confectionery products to the country. (4) Cost of productions when launching product into China market . We have to study more about Tax and Import duty and any costs that affect our products. 124 APPENDIX A COMPETITORS OF THAI SWEET CANDY Table A. l. The Players in the Chocolate Confectionery Industry. Company Brand Name Products Setup I Profile Effem Foods (Beijing) Co. Dove/m&m's Chocolate candies, bars, JN gift pack and boxes Hershey International Co. Hershey's Chocolate candies and bars, Import, with rep. office in Shanghai ...... Cadbury Food Co. Beijing Cadbury Choclate bars JN t0 V1 Shenzhen Le Conte' Foodstuff Co Le Conte' Chocolate candies and bars, JN Tianjin Neatle Co. Kit Kat Chocolate wafers JN Shanghai Colone Cocoa Products Co Ce'moi Chocolate candies and bars, JN Shanghai Shen Feng Foods Co. Shen Feng Chocolate candies, bars, Locally controlled JN, No. 1 in gift pack and boxes Shanghai Ferrero S.p.A Ferrero Rocher Chocolate specialty candy import Lindt & Sprungi(Schweiz) AG Lindt Chocolate bars and boxes import Table A.2. The Players in the Non-chocolate Sugar Confectionery Industry. Company Brand Name Products Setup I Profile Guan Seng Yuan Food Group Co White Rabbit creamy toffe, hard candy Local group co., biggest local nougat and various brand, has several JN's Shanghai Wo Wo Food Group Co Wo Wo, Jia Jia creamy toffe, hard candy Pudong township co., has JN ...... Gold Monkey Group Co . Gold Monkey(JinSiHou) creamy toffe, hard candy Local group from Herran N 0\ Suzhou Magna Food Co. Kopiko coffee hard candy Indonesian JN Shanghai Perfetti Confectionery Co Alpenliebe butter scotch hard candy Licensed coop-JN with Italy Shanghai Chupa Chups Food Co Chupa Chups lolly pops JNwithGSY Shanghai ABC Confectionery Co A-Mi (Kitty) creamy toffe, hard candy American-born Chinese JN Guangdong Xi Zi Lang Group Co Xi Zi Lang jelly bites local, family-owned Wrigley's Confectionery Co. Wrigley's chewing gum JN PT Van Melle Indonesia Co. Mentos mint candy import Dongguan Xu Fu Ji Food Co. Xu Fu Ji various hard and soft candies local APPENDIX B MARKETING ACTIVITIES CALENDAR Table B. l. Marketing Activities Calender For First Year Enter. Media Jan I Feb I Mar I Apr I May I Jun I Jul I Aug I Sep I Oct I Nov I Dec 15 31115 28115 31115 30115 31115 30115 31115 31115 30115 31115 30115 31 Market Programs New Year 2004 promotion Chinese New Year Main Line Promotions Mid Year Sales Clearance Sales Television 8 ~IR_a_d_io~~~~~~~~~~~~__, Newspaper 1/3 page ads Magazine 1/4 page ads Point of Purchase Displays Promotion P-0-P Discount Sample free Price-offs Training Program Free goods New customers incentive APPENDIX C PRODUCT LINES UNDER THAI SWEET CANDY c C> N T PRODUCTS PACKING CTNSI NO. PRODUCTS PACKING WIDTH HEIGHT 20' FCL WIDTH LENGTH 18 UNITED COFFEE SANG HAI 1X36X15 23.5 38 39 800 -40 GMS. 1X6x12 24.3 36.8 20.2 FONTANA - 200 GMS. 1X24x:50 24.5 38 20 - 38 GMS. 1X12Xi2 28.7 39.1 N.7 1,015 -1,200 GMS. 1X6x300 27.5 41 24.5 - 125 GMS. 1X4X6 33 44 18.3 1,060 19 UNITED BUTTER SCOTCH SANGHA! BIG BITE -40 GMS, 1X6X12 24.3 36.8 20.2 -12GMS. 1X12X24 21.3 34.5 28 1,300 - 200GMS. 1X24x50 24.5 38 20 -12GMS. 1X48X5 26.2 38.6 21.6 1,270 1X6x300 27.5 41 24.5 SUNDAY 1X24X12 27.2 53.2 30.6 630 SNACK CHIP CHAP -22GMS. 1X6X12 28.5 48,2 42.2 470 - 120 GMS. 1X12 34.9 54 26 570 IDAHO -22 GMS. 1X6X12 28.5 48.2 42.2 470 -120 GMS. 1X12 34.9 54 26 570 - 130 GMS. 1X12 24.5 32 25.5 1,400 TORO (BUTTER) - 33GMS. 1X12X12 30.3 51.5 54.3 330 -100GMS. 1X24 38 54.7 25.5 530 TORO (ALMOND) -22GMS. 27 59 48 365 -110GMS. 37.6 54.7 25.4 540 PLUM -30GMS. 1X6X12 24.8 48.6 21.5 1,080 -30GMS. 1X6X24 3i.6 39 28.5 910 -120 GMS. 1X48X40 35 38 28.5 730 -300 GMS. iX24X100 26 36 26 1,080 -900 GMS. 1X6X300 27.5 41 24.5 1,000 - i,575 GMS. 1X8X525 32.5 52 23.5 700 STARLET - 30GMS. 1X6X12 24.8 48.6 21.5 1,080 - i20 GMS. 1X48X40 35 38 28.5 730 -300GMS. 1X24X100 30 41.5 28.5 780 1Xi2X36 22 38 25 -900GMS. 1X6X300 27.5 41 24.5 1,000 1X6X50 27.5 41 24.5 MR.NUT 31 1X6X100 27.5 24.5 -132 GMS. 1X4BX40 35 38 28.5 730 a2 - 330GMS. 1X24X100 30 41.5 28.5 780 -37.5 GMS. 1X6Xi2 25.5 42.5 26.5 - 990GMS. 1X6X300 27.5 41 24.5 1,000 -112.5 GMS. 1X24X15 26 35.2 20.4 123ZAA -375GMS. iXi2X50 33 42.5 23.5 - i32 GMS. 1X48X40 35 38 28.5 730 - 750GMS. 1X6Xi00 27.5 41 24.5 - 330GMS. iX24X100 30 41 28.5 780 -990GMS. 1X6X300 27.5 41 24.5 1,000 BUGGY 33 YOYO - 280 GMS. 1X24X100 27 39 29.5 900 -27.SGMS. 1X8X12 23.2 49.3 21.8 - B40GMS. 1X6X300 27.5 41 24.5 1,000 -120 GMS. 1X24X22 26.2 aa.s 21.4 FRUTTA - 275 GMS. 1X20X50 21l.5 46 -140GMS. 1X48X40 35 38 28.5 730 34 TOMMY VLOVE · 33 GMS. 1X6X24 29.8 38 26 30,6 21.4 -150 GMS. 1X24X25 26.3 35.5 21.5 1,380 -33 GMS. 1X12X12 43.B 30.2 MAKAM -70 GMS. 1X8X12 23.6 .. -140GMS. 1X48X40 35 38 28.5 730 35 FANCY JELLY 1X20X10 ao 39.5 21 45.5 21 ·350GMS. 1X24X100 32 44.2 19.4 1,015 36 MINITURE 1X20X10 30 18 - i,050GMS. 1X6X300 27.5 41 24.5 1,000 37 UNITED MOTTA JELLY 1X30X5 28.5 30.5 37.7 18.5 TRIO 38 UNITED ICE CREAM POLAR 1X24XS 29 -200GMS. 1X24X50 24.5 38 20 1,500 39 PEPITO 1X12X6 44.3 2~.8 19.8 Figure C.1. Contents of Product Lists. 128 i620+7 J!ll17 ~R.:>20:1711112·1 !4,l~.;J:l7 l l 11J:l I" .l.ii:.21H;t 11 !17'' 2'.·~. 1X'·1MX:\~l err~. ·2:\ )"J l.:t IUt..UU\' l. 'r\':\J I.lit; (:~I ACJ<1 ,; ~52047124 \'17 tt852Ci47125il 1 ;:.: :t~::.\ 147 ! 2.~~!) .l-J l-}.;12()47 J27:\!7· ~:1. "'iX:il":x.·5 1;. \in IX12\12 2.S.T\'.}YJX24.7 1XJ2\ I? :'t../X~·V.i P::?·l.? 1·~11 ~;C'XJl/. t x2.;.:;·, m ClCK\JLA1T UKK'OL\!'C A !:i.S:?:J-17 l 2ti'.?27 r, Hi+.2l47 ~~I(~.',_".[, H s.::;::,1-i; ·1 iuns 3'.:l.X44.XliULW ~6 2\·1~.l1X21.r1 rm. ..!.I :1x:~-1.1x2}1.lu1. , I M~;;i2.t1.;.7 rl\12Jlj t{ti-5?tH7 nn:ntt !) kl:i21'.'-'l"/ l t'~1;_·; .i.; t'!.12>:!"17 1L-\ I .J:' •?!i.2\ '.iS.6). 21.1~ 0:-ffL 1X12X24 ~ l J\J.-1,SX2N o. tu .:..7.2:X:l1,';;\3l~.h ;~m. 27.::X2'3,2.X3(1 t- mi, CHIP CHAJ' l'OTATCH'1U$!'S ll G. (:Hll'CHA!' P(lT!llUfRISl'S 12ll C, i:Hlf>C!Ml'POM!O CfWiPSJWG. N 1 ;-i.'-1'.};-11)~7 ·12tt"IV1 .i.: p.;;J.1>-1~: :U.'l:.! L-i 8 h 121:47 .1291'.~l l';io.')*,1-:'.:D·l7.,:i;::;•,i:;,:w A 2.l .K t·r;211.t.? :-u:n1;... ~ ,s:;2i:µ,1 .12&J1t:i n H321.h.J7 3?'~:'· 1'7 24 '.-·X·~8 2:>,42 7 ..:m tXL2 -'."14.9X54X2ti un. IXl:' :1L:>:o7.\l~1.':"i .,,n· ::rL·)'.\"IK.2.\A~ '.:: Figure C.2. Picture of Wafer and Snack Products. 129 'TORO POPCORN !'I. ·1 rl:ll s N ;.;, ,1;;5;047 128-·n1 r; S'.)1(1,;f :.iJxJJ/. r: ~Fi~(l4? :Uhl t.:. B8.'\W4 7 :l""" 1.1 3'U3\515X5'f ·h_·m. ;i8X54 7XE',5 cm. A lXl2 24.5\J2\2S.. =1 tm lX.12 2,15x:-r:x2."1.'i rm. tXL:XJ2 1X24 c J2 G, 'IOJW .UMOND 110 G. I< s 852047 3c6191 S Bt:.204'7 J26'7S'5 27X.=i9:X4l~ ~-nt. lX24 :~7/1X$·-L'7X'ZS..4 1:rn. ~ ~s:~.~1-.r:: 2110:.'2 H-81)2L).t,7:.'.!l18-t7 B 8.32,:J47 2.~L:i 3 IX6X'.H ;:ti .tix:~H-A:!H5 .;;m. 35,\j.,~\~)j.5 (01 1X2-IXJ\JI~ 26XJ.f{X26 i::Jii. 8R12047 211ll·i tl. 8~20-b7 ZL~5~\2. 8 r.:;?J!~7 2:1::..rr\ 1\8:\525 '12.. "IX~2X2'.~}; cm. lXb\12 Z·l.l-IX4h.fiX21.:; nn 1X4RXW 3-5X3t'>X7}1 ~cm ~ ~ 1Y.21)4'/ 2 ! r.;_7;.)(J 0 ti>~W472J24lk ;...; .";~'.?14:-~ '2l~2li"J 27 5X4 ! \:i.l .. "i rtlL 35X~~BX2tl 5 (IP iX24XlDt! 3UX1l .. :'iX?tl5~·m. s 852d4 'J 2161';_~.J !{851lH'J 21r,·.;;-;;11 H i'S112f;47 21f~7R2 J3X?.SX1N!3 cm lX'l-tXJl~!"'c 7-0X41X2l:'. ,3 cm, 21 ..;x..:i1x2.t5 en' 2 Figure C.3. Candy Products. 130 "------""""_"__ ------"-- (''._!L·t LL'dl-1\.lW'-~\.(,J•, -iA.!.J.1. Ji H:lt ;~ ,Ji,\1\'F,f J.~V s 85204:7 225J l q M.HS~.0472184H) B 852047 200108 27.11X4lX243 i:m J~X:-J.~K2K}i t·m. 2tt.:1X~Ci-5X21.!i un. 8 H<'.'12\}472112.:'.X ~ s;;.::'04'7 215 :::9 t<. ;'.:i5:?lH7l1:~i1 '.t lX24XltXl 3?X44 :L~l'JA m1. 2'7 ..1X-11X:l4.:1 Ol'L IX2-tX5t:• '.:!.-Lt;X.V;:X2H ,m. COJIU H f.52L'l.17 2J7:l U 88.';20·17217314 ~ B02\J.'17 21n1'1 2-tSXk:?-;20 ,,;.in. :;:/,5X4!X:::~5cm. •2-t.:1x:v.d:ix2.o.2 1.-·•:n. ~ t:~?Uf'.I 21 '/.L:1; 8 ~~2D472173J1 I ~8~211+7:'.:1tHH 8 H52047 2 j IY112 IX24X5Ll ~·l 5X.38X20 Cfll 17.SX>l1X1·t.5 cm. 35X3J:IX..::~.3 i.:111. ~1.;:;x.nx:.M ..'.i ri:.. L :use. ·b'lf/6, ~11Lk MJU, !,,C ~L ttl"'821:47 21rY:,1 !tl 8 S52llJ7 2.2(lC·l 7 ~/:i?i2(Vi722H~l·1 H H3W47 22!~J24 'H lX~XL: 7>L8X·IH.2X2~:1 ..-m. 2li.2.X1~.~!X.2 ! A Ull. lX6Xl50 275A4L'Q4.5 cm. IX24X22 2.6 2.X38,(1X21 A rn"'i 'E 118G. o'fJJ ;'f_ R S52047 ?:?fl:JJl K s:;2(i.i7 2~12All2 2c,.2XJS.6X2'1.'I un. 27A,\>1S 5X iciA cm. Figure C.4. Candy & Chewy Products. 131 St. Gabriel's Library, Au B 30QQ, A 12l'JLCL'- K E R y S!:l.)2(1'171,IJ'..!.:l-1 11 8 SS20-±7 &J l?i l1 ;-nr-:.:::.u.JJ ~:.i:.1.s121, Ji fi::j21J.:17 (·(15,1?> lX::!-tXtr :t;,.~X4$,\23,2 i.::m 1:\:1 l'.\~.· :-!il8,\-~HX21.2 nn. l\.'24X1) .::tU.i,XS3X~9.:1 l'm .:::~x4s·:ns..::; 1.T·( -~ t;-;;;:::l47 +I JJ I [i to ~·C•20J7 -113112 8 H5lt,l;;.7...J.12.',_(). 21 :t\=l I x2:.1.:1 G11 27,,;X-!J :\1~,.:; l'.nL JX6Xl2 2...1 ~u.;r:::·.5x::r\ .. ~; ,·1n. 8 A52t}if ·ll?Jl·~ DX425\::i:],, UIL !:! k?i2l!·l7 '2'3·121i-i .~ 83?.\J47 2'1'2·i\19 ~ &5::0--17 ?3) 11 q kX.112N72J},i26 IX4XJ2 :2J.2-X4\1.3X.'! 1.b ;,:rn. JX8XI2 2J 2X49 3X21 t' (lri ;,;:1 ,_2X.1S.'.·tX21 A UIJ :::r'~.2x:~1-u .. x11A 1.:11 4 Figure C.5. Biscuit Stick, Bakery, Chocolate and Jelly Products. 132 ,.. ; K32~M7 232 L13 fi X~Z\)47 2.)~'J.+I:· S !-!"i?.(H/ ::!.\~1'15 iX24X22 2h 2XJX 6\.2\A rm. 1X~·IX27 26.2X:'Hf·X21.·1 cm. l;,.2:1\?~ 2.6 2 XJK6\:". l A Ol1 ~ s:i.2rJr? :?:33116 H K52J:.l7'23:?1U'.? f:l. .SS2047 232607 g ~5:!3li17 237;il»I 26 2X3S.6X2l i un. LX24X22 2.11.2X1R.6X~1.4 \. m. "!X2HXSd 2\l}iA46X2·i ..=i i:rl~, !XhX'.!4 29.!i.\]f..X~6 C!lL MH.1:!\J:1?2.T?}!l ;..; K."-i1(Vi7 21111 :'.! s S5t:lif7 :'.41111::.i 1 X12X12 2M.t:>X4J.b:'.l:.2 l .'l on Jl~XJ9 '.i:-<..7.l C1TI. !X2f'.'Xl0 ::iiox4:;sx21 i..w 'I P:.,ll'-47 21(1~1~7 8 &521)47 7f)[l[IJ.j 8 852047 7fX1{)2 l 2r.. ;x·m.sx1 ~ nn. IX12X!· 4·L-~X28.K\ l ti,:;; .:.:m. IXJ2Xt; -!-!.1X2f;.h),_.J9.S- cm. K ~3~(147 7\l(ll:-W, b 852U47 71)'.IPl: 5 Figure C.6. Water Jelly Products. 133 APPENDIX D TRADE EXHIBITION IN CHINA Figure D.l. Picture of Food Exhibition in Shanghai. Figure D.2. Picture of Grand Opening Day in Exhibition. 134 Figure D.3 . Wedding Cake Competition 1. Figure D.4. Wedding Cake Competition 2. 135 Figure D.5 . Booth in the Exhibition. Figure D.6. Chocolate Chinese Boat. 136 BIBLIOGRAPHY 1. Henry, Assael. Consumer Behavior and Marketing Action, Fifth Edition. New York: South-Western College Publishing, 1995. 2. Hiebing, Roman G., Jr. and Scott W. Cooper. The I-Day Marketing Plan. Chicago. NTC I Contemporary Publishing Company, 1992. 3. Kotler, Philip. Marketing Management: Analysis Planning Implementation Control, Ninth Edition. New Jersey: Prentice-Hall, Inc., 1997. 4. Belch, George E. & Michael A. Belch. Advertising and Promotion: An Integrated Marketing Communication Perspective, Fifth Edition. New York: McGraw-Hill Irwin Company 2001. St Gabriel's Library, Au 137