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
December 2001 China joined the WTO
Major shift in focus for government
Opening economy to other countries for the first
time
Reducing tariff and non tariff barriers to trade
Highly concentrated population density
10 most populous provinces have almost
60% of total population
TARGET MARKETS
RURAL
62% population
Lower living standards
Average per capita expenditure on food/
drink in 2002: $31 (256.7 RMB)
URBAN
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
Natural/ Organic focus
Diets based around five tree fruits
peaches, plums, apricots, chestnuts, dates
Size
Dependant on mode of transportation
Popularity of bicycles and motorbikes
Practicality of cars and taxis
Comparable to competitors’ average of 250 mL.
PRODUCT
Type of Bottle
On-the-go consumers
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
Not member of Trademark Association
Must abide by their own trademark laws within China
No strict enforcement of these rules
PRODUCT
Label
Mandarin Chinese is official language
Consumers are fact driven at point of purchase
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
Price sensitive for food/beverages
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
Low education level leads to high
number of industrial workers
Cheap labor
Technology
China has been lagging behind the rest of
the industrial world
Over protective regulations
Low level of education in the Chinese workforce
PLACE
Distribution
Three Available types of distribution there
Pepsi
Partner with their pre-established distribution
centers and distribution system
Unilever
Set up our own distribution system
The Third Party Distributor
Outsource distribution
Possible companies: Emerge logistics, Elee China
Type of transportation
Railways, Ports, Airplanes, Highways
PLACE
Inadequate in terms of delivery, sales,
merchandising, promotion and collection
Not likely to change due to government restrictions
on foreign investment.
Current distribution trends
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
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
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
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
In 2001, 70% sales were FOOD
Mainly focused on daily necessities
Store is known to consumers for food
Discounters
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
Tea is extremely popular in China
Already begun the transition from hot to iced
Ingrained in culture
Tea Per Capita volume 2002= 33.3 liters
RTD Tea Per Capita volume 2002 =33.03 liters
Competitors
President Iced Tea (26% market share)
Mr. Kon (30% market share)
Media
Television
Radio
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
45.8 million users in 2002
Increasing rapidly
Media
Newspaper
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
Almost 9,000 magazines
Smallest advertising revenue (1.49%)
Thank You
Any Questions?