Transcript CHINA

CHINA
Kathryn Braun
Doug Farrell
Tricia Felice
Michael McCluskey
Peter Vaccaro
Economic Overview
 GNP 2004 will be $1.3 trillion
Increasing average of 8% each year
 Age distribution: 70% between 15-64
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 December 2001 China joined the WTO
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Major shift in focus for government
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Opening economy to other countries for the first
time
Reducing tariff and non tariff barriers to trade
 Highly concentrated population density
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10 most populous provinces have almost
60% of total population
TARGET MARKETS
 RURAL
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62% population
Lower living standards
Average per capita expenditure on food/
drink in 2002: $31 (256.7 RMB)
 URBAN
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38% population
Average per capita expenditure on food/
drink in 2002: $346 (2859 RMB)
Incomes rising at almost twice the rate of
rural consumers
PRODUCT
 Content
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Natural/ Organic focus
Diets based around five tree fruits
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peaches, plums, apricots, chestnuts, dates
 Size
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Dependant on mode of transportation
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Popularity of bicycles and motorbikes
Practicality of cars and taxis
Comparable to competitors’ average of 250 mL.
PRODUCT
 Type of Bottle
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On-the-go consumers
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Durability
Effect on lid as well as material used
China maintains a significant foreign trade in plastic
products
Majority of RTD beverage competitors use aluminum
cans.
 Brand
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Not member of Trademark Association
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Must abide by their own trademark laws within China
No strict enforcement of these rules
PRODUCT
 Label
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Mandarin Chinese is official language
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Consumers are fact driven at point of purchase
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Should test names with consumers in cities with different
dialects (Beijing, Shanghai, Guangzhou)
State the benefits of the product.
Red and gold are the most motivating colors in
Chinese culture
PRICE
 HOW MUCH SHOULD IT COST
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Price sensitive for food/beverages
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Competitors prices – $.25 for a aluminum container.
Economy status – on the rise which means
they have more disposable income.
Taxes, markup in channels
Production cost
PLACE
 Manufacturing
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Low education level leads to high
number of industrial workers
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Cheap labor
Technology
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China has been lagging behind the rest of
the industrial world
 Over protective regulations
 Low level of education in the Chinese workforce
PLACE
 Distribution
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Three Available types of distribution there
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Pepsi
 Partner with their pre-established distribution
centers and distribution system
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Unilever
 Set up our own distribution system
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The Third Party Distributor
 Outsource distribution
 Possible companies: Emerge logistics, Elee China
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Type of transportation
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Railways, Ports, Airplanes, Highways
PLACE
 Inadequate in terms of delivery, sales,
merchandising, promotion and collection
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Not likely to change due to government restrictions
on foreign investment.
 Current distribution trends
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78% cargo carried by trucks
Into 2001, length of road constructed
increased by 30%
Total road passenger volume increased 120%
Road cargo volume increased 46%
Retailers
 Supermarkets
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Adjusting food to nonfood ratio (increasing nonfood)
In 2001, 63.2% supermarket sales were FOOD
Top 4 retail chains in China are all supermarket
Most popular outlet for brand name food/beverage
items
Most frequently located in urban areas
Retailers
 Hypermarkets
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In 2001, 63% hypermarket sales were FOOD
Mainly deal with medium quality goods
(electrical appliances, clothing, daily
necessities) as well as food products
Being built close to large living quarters, on
immediate outskirts of city- serves both city
and out-of-town residents
Retail sales growth = 1000%
Retailers
 Conveniences Stores
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In 2001, 62% sales were FOOD
Have tried to increase competitiveness by
offering more non-food products
Located close to consumers so food should
stay high on priority list
Especially important are impulse purchases
such as confectionary items and soft drinks
Retail sales growth = 97%
Retailers
 Independent Grocers
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In 2001, 70% sales were FOOD
Mainly focused on daily necessities
Store is known to consumers for food
 Discounters
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In 2001, 67% sales were FOOD
Current trend toward non-food sales
PROMOTIONS
 Not well developed ads
 Beverages are 6th ranked most
advertised product
 Must abide by National Advertising
Law
PROMOTIONS
 Positioning
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Tea is extremely popular in China
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Already begun the transition from hot to iced
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Ingrained in culture
Tea Per Capita volume 2002= 33.3 liters
RTD Tea Per Capita volume 2002 =33.03 liters
Competitors
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President Iced Tea (26% market share)
Mr. Kon (30% market share)
Media
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Television
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Radio
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94% population has TV coverage
22% of total advertising went to TV
Reaches 93% of China’s population
Despite belief that its role as key source of
information has been eroded by other media
sources, spending on radio advertising is
increasing.
Internet
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45.8 million users in 2002
Increasing rapidly
Media
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Newspaper
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Most are locally based so advertising can be
location specific
Use national newspapers to establish brand identity
and image
2007 newspapers
Facing intense competition
Newspaper advertising spending grew almost 20%
in 2001
Magazine
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Almost 9,000 magazines
Smallest advertising revenue (1.49%)
Thank You
Any Questions?