The Strategic Marketing Plan Audit - Tsingtao in China - Case Study Example

Board of Director Andy 16/03/2009 RE: International Marketing Plan 0. Introduction: The market share of Tsingtao in China is formidable despite the steep competition it faces from other brands such as Zhujiang and Yanjing among other local brands. The brewery that brews Tsingtao was started in 1903 by the German businessmen in China. It was then taken over by the Japanese in 1945 before it was then reclaimed by the Chinese nationalist government in Nanjing till 1949 when the People’s Republic of China took up the brewery together with its brands (Yang, 2005). Upon the beer being taken up by the state, it did not perform very well in the local market till 1980 (Colley, 2005) and it is maybe because of this reason that the brand was introduced to the US market in 1972. Since then it has continued to command a competitive market edge despite the competition from Zhujiang and Yanjing, the major Chinese beer brands in the US. Tsingtao Brand at the moment is present in more than fifty countries in the world (Yang, 2007) and the international market for the beer has proven feasibility and great ROI. This paper seeks to highlight the possibility of venturing into the England market. The paper is simply a marketing plan for the introduction of the Tsingtao brand into the England market and aims extensively at analyzing the situation at the England beer market and a SWOT analysis to establish the feasibility of the brand in the market. Further, the paper aims to offer the best marketing mix and marketing strategies that will aid in the best anticipated performance of the brand in the market. 2.0. Situational analysis 2.1 Internal and External factors Tsingtao has performed stunningly well in the markets it has been introduced to. For instance, in the US, the brand continues to perform very well not to mention its acceptable market share in the local Chinese market. England as the new target market for the beer appears a formidable market which can equally be competitive. This is basically because of the country’s economic status; it is the second largest economy in Europe and fifth in the world. It is considered as the center of world economics and tops the chemical and pharmaceutical sectors, technical industries such as aerospace and hardware/software manufacture. Certainly, England is one of the most greatly industrialized countries in the world. The fact that the beer has performed particularly well in the US which is another world’s strongest economy is a clear marker that the beer can equally survive the beer market competition in England. There happens to be a favorable economic infrastructure in England which is favorable for a better market performance of the beer. The people in England lead an abundant life and it is not a problem spending on beer. In fact, if there is anything that is really selling in England, it is beer. This explains the steep competition in the England’s beer market; because the demand for beer is generally high. Secondly, the banking sector is very stable and the interest rates are competitive. This therefore presents a good opportunity for the initialization of the market for the beer with a promise for a ROI. Thirdly, Tourism happens to be the greatest source of revenue for England and thus if the brand of the beer will be build with a formidable promise of quality and class, then it can tap heavily from the very heart of tourism and this is likely to attract the natives and residents of England to try out the beer because it is believed that anything that holds the attention of the tourists must be really good and this alone is able to jumpstart and maintain the market performance of the beer. Finally, there has been an increased demand for Chinese food, Chinese philosophy and literature. People abroad are more interested now than before in Chinese history and culture. The interest is more skewed to the west and particularly Europe. Most five star tourist hotels take pride in serving Chinese food. Therefore, based on this increasing interest in Chinese products, the introduction of Tsingtao into the England beer market as one of other Chinese products is likely to cause a positive stir and impact on the market. The fact that the brand has a distinct taste of barley and the signature taste of rice and the fact that it is brewed using mineral water, its resultant crisp taste and its 4.7% alcohol content and pilsner nature is indeed a profile which will attract a number of consumers not because of its Chinese origin but because of its brand promise of quality. 2.2 Competitive Analysis and Target Market As mentioned earlier, England’s beer market is highly competitive and introducing Tsingtao into such a market requires a formidable marketing strategy and as aggressive and wonderful marketing mix to be able to capture a customer base which will be sufficient to approve feasibility. It is true that the brand has a distinct characteristic taste and the fact that it is Chinese gives it a competitive edge in the market but this is not enough if people have not gotten to the point of tasting the brand promise of quality that Tsingtao has to offer. In the introduction of a brand into a new market, it is important that one gets to understand the competition in that particular market segment to see the kind of scenario the product being introduced is up against. Just to offer a glimpse of the formidable products that the brand will be up against; we have brands produced by breweries such as Wye Valley, Wychwood, Woodforde’s, Wood brewery Ltd. (PPL, 2005) and other breweries that produce beer brands considered as beers of the world. Actually, England is regarded as one of the producers of high-end beers in the world. Technically, the kind of market that Tsingtao is being introduced to not just a mere young, untapped, un-ventured and virgin market. It is a quite mature market where some of the leading world brands combine their global and local brand recognition to command a formidable market segment and share in the England’s beer market. London is the economic, social and financial nerve centre for the entire England and the UK. It is the major tourist hub and most of the affluence witnessed in England starts in London. Therefore, if the Tsingtao brand has to be introduced in England’s beer market, then it has to be focused on the London market. This is particularly so because if Tsingtao happens to hit and survive the competition in the London’s beer market, then it would have penetrated the entire England’s beer market just as well. There has been a tendency of taking cues from London’s way of life and tastes and preferences and the cues have been strongly influencing to the rest of the UK, England inclusive. The focus on London followed by a progressive penetration of the entire England market has triple benefits for the brand’s subsequent market performance. First, London is a tourist attraction hub and if the beer hits in London, the rest of the market segments will be an easier story to narrate. The approval of the tourists for the beer is an influential factor both to the residents of London and the rest of the United Kingdoms. That which the tourists demand must be of quality and this is based on the affluence and love for quality associated with the tourists anywhere in the world. Secondly, the tourists who visit London proceed to visit other tourist attractions in the entire England and the rest of the UK. This will therefore require that the resorts in the interior of England have to stock the Tsingtao brand for the sake of the tourists who could have liked the crisp taste of the Chinese brand. This will aid in distribution network because no tourist resort will want a tourist customer to demand a product which they lack. Once the product is demanded for once and it lacks, there follows efforts to look for the product because that is basically a pointer of the increasing popularity of the product which will rapidly continue based on the contagious influence the tourists have on each other. It is presumed that people will become accustomed to the Asian taste of Tsingtao Beer because some cuisines in England pride Asian and particularly Chinese origin but they are often adapted to the British tastes. In fact, Indian and Chinese cuisines are adapted into the culinary life of British. It thus suggests that the beer will be able to meet the expectations of people in the target country and it is likely to attain an acceptable consumer’s brand loyalty (Purcell & Boxal, 2003). Finally, London and presumably England, is a highly metropolitan city and country respectively. People from all over the world reside, live, study and work in England. Based on the fact that the Tsingtao beer brand is already selling in a number of countries including US, it is imperative that the beer will be taken up by the people who could have seen or tasted it elsewhere. The Chinese population in England and London for that matter will serve a very crucial role of influencing the rest of British people and other nationalities in England to take the beer. If the beer is served in most of the Chinese restaurants in London and England, it will take advantage of the popularity of the Chinese food served in these restaurants. 2.3 SWOT Analysis 2.3.1 Strengths Distinct crisp taste from barley and rice likely to differentiate from the rest of the brands in the England’s beer market Brewed with mineral water and this makes the beer unique Originally brewed in German style which got fused with Chinese style to give it a stunning taste and quality Stunning market performance at home and US despite the competition proves the superior quality of the Tsingtao brand. Selling in a number of international markets 2.3.2 Weaknesses Relatively low alcohol content of alcohol as compared to others that have more than 5% Shortage for the consultants at the operating level of the company is also seen to be one of the business’ weaknesses considering that an international market requires more effort in order to manage the brewery excellently and sustain its competitiveness worldwide (Kotler & Keller, 2006). 2.3.3 Opportunities Popularity of Chinese food in England and London is likely to positively impact the marketability of the Tsingtao brand Strong and mature economic infrastructure, especially in the banking sector, will go a long way to ease the effort of introducing the Tsingtao brand into the England’s beer market. Partnerships with other progressive breweries can be very helpful to achieve the objectives of Tsingtao Company to introduce the beer brand in the international market. Presence of Halewood International Ltd which is responsible for the distribution of Tsingtao Beer in UK and Ireland will help monitor feasibility and offer advice Tourism boom in England can help hasten the distribution chain of the Tsingtao brand if they get to like the Tsingtao brand. Presence of formidable population of Chinese nationals in England who will, besides taking the beer themselves, influence other nationals to take the beer Presence of the Tsingtao brand in UK and Ireland is likely to boost the brand recognition, brand identity and brand promise of quality anticipated for the Tsingtao brand in the England’s beer market 2.3.4 Threats The steep competition in the England’s beer market poses a great threat to the performance of the Tsingtao brand in the market. England being one of the producers of beers deemed as beers of the world may affect the way the Chinese Tsingtao brand may be viewed in a market that s saturated with superior quality beers of alcohol content greater than 5%. 3.0 International Marketing Objectives Tsingtao international marketing objectives demand that the Tsingtao brand be introduced in international markets other than the source country i.e. China. The most important question in this case is what is the greatest motivation of wanting to introduce the Tsingtao brand in the markets abroad? The reasons for these are as follows: To compensate for the less than expected market performance of the Tsingtao brand at home or other countries abroad To ensure an elevated brand recognition Through internationalizing a brand, the sales and the general brand recognition at home is boosted. To venture into other markets so as to increase the market segment of the Tsingtao brand To ensure an expansion culture; internationalizing the Tsingtao brand represents the implementation of the expansion agenda of the brewers of the Tsingtao brand To increase the Tsingtao brand’s promise of quality; Internationalizing a brand boosts the way its quality is perceived especially if it is being introduced into an affluent market segment. Presence of a company’s brands on the international arena increases the ratings of that company at home in terms of its share prices and equities. To boost the profit margins; internationalization of Tsingtao brand opens up new markets and this is likely to expand the overall profit margins To test the quality perception of the Tsingtao brand. The brewers often produce a brand but it is the customers that rate the product. If the brand is accepted in an affluent market like England, then it proves that the brand is basically that of superior quality. 4.0. Marketing strategy Marketing environment constitutes of all the external actors and issues that affect the marketing decisions and practices of a business. Therefore, as far as international market is concerned, the feasibility of a new product in a new market and the subsequent growth of the products market need a strategy. According to Ansoff’s product/market growth matrix, the attempts of a business enterprise to grow or expand depends on whether or not the business enterprise markets new or existing products in a new or already existing markets Market development In this business growth strategy, an existing product is introduces in a new market. Tsingtao brand (an already existing product) is introduced to a new market and its ultimate optimum performance of the brand in the new market depends on the approach to this strategy of market development (Good & Granovsky, 1995). For the marketing of the Tsingtao brand, the best approach to the market development strategy is to continue exporting the product abroad using the already existing route through which Halewood International Ltd which is responsible for the distribution of Tsingtao Beer in UK and Ireland gets its supply from the brewers of Tsingtao Beer. If this approach works out well, then later on a possibility for manufacturing plant in England shall be considered depending on its feasibility compared to the cost of exporting the beer to both the England market and the Halewood International Ltd. Consideration for a production plant is possible because of the cheap cost of production in England. Generally, England provides a good and favorable environment for the production activity. Once the product is in the market, Marcoms can be applied to help establish brand recognition and brand identity in the new market. This aggressive marketing will get the people to talk of the product and thus an aspect of buss marketing is possible (Hughes, 2005). The marketing plan will be carried out by using any one or mixture of the elements of the Marketing Communications, or Promotions Mix shown in the diagram below. The elements of the marketing communications mix Different pricing policies may be used so as to attract different customers or to create new market segments but before this, market penetration may occur through either direct or indirect export or both followed by an aggressive promotional mix as shown in the above Marcoms diagram (Baker, 2008). In this case, adaptation of marketing strategy will be helpful. One new venture in marketing that can help is sponsorship. This is particularly feasible based on the fact that England adores football. Therefore, if one football star is contracted to market the beer then this can make the beer enter the market in a storm. Similarly, advertisements are effective strategies in order to introduce the Tsingtao beer to the entire country. TV is the most appropriate way for the advertisements especially during a soccer match so as to reach a large number of viewers (Patterson, 2008). 5.0. Implementation and control The implementation of the entire marketing plan and its control is necessary so as to ensure that its sustainability is ensured. Any venture that can not be sustained and above all be self sufficient is a liability and not a worthwhile venture (Kolk, 2003).the marcoms plan to be used includes an initial launching covered by national TV before a number of introductory advertisements on TV and newspapers. Even though billboards may not be as effective as such, the posting of the product on billboards along main highways will serve to help initialize the brand recognition. The financial implication for the plan will need more than £200-£500 million annually before the product gets sustainable market popularity and market segment that will keep it going. The table below shows the financial Implication of the Marcoms plan: Marcom Plan Cost (£ millions) Launching Advertisements (TV) Advertisements (Newspapers) Billboard Sponsorships Road show promotions shows 50 20 10 5 10 10 The amount will need to be reduced progressively as the market continues to accommodate the Tsingtao brand. The range of the money quoted in the foregoing sentences includes the cost for Marcoms and is likely to reduce as time goes by because initialization is often very expensive and aggressiveness of the malcoms will subside as the product hits and commands its share in the new market. Control The massive investments made to popularize the brand in the market require that a control mechanism is put into place to prevent wastage of resources by showing the exact time of withdrawal of some specific financial commitments. The control is necessary because, it will be useless to continue advertising massively when the brand has already claimed its position and share in the market. The control mechanism requires an apt, careful and analytic approach because if this is not provided, financial commitment may be withdrawn when brand popularity and introduction to more new markets has not reached their climax. This is why the three components-aptness, carefulness and analysis-of the control mechanism are necessary. Aptness in control mechanism means that a decisive action is made at it right time. A little delay, and the market dynamics have changed and the action becomes irrelevant even when it costs massive amounts. Carefulness is required because marketing is a gamble. There is a great financial risk involved. It is possible that all the amounts in the table above are invested and the brand fails to pick up. The opposite is also true. Therefore, in any scenario of risk management, it is necessary that careful control is upheld. The risk that is so gaping has to be avoided. Finally, analytic function within the control mechanism will ensure that the entire market environment is understood through a step by step detailed dissection. The other brands have to be analyzed and compared to the brand being introduced in terms of their strengths and weaknesses. The other brands’ promises, popularity and recognition have to be understood so as to guide the marcoms on how deep to dig to achieve what is aimed. The brands in the market may not be of superior quality and this will mean that little has to be spent just to introduce the product into the market after which the brand will work its way up on its own based on its promise of quality as compared to all the other brands in the market. However, if the other brands happen to be of superior quality, then much more requires to be invested. At the end of the day it will be an issue of judgmental acuity that will bring forth a formidable control mechanism after the implementation has been initiated. 6.0. Conclusion In conclusion, the Tsingtao brand can feasibly perform in an England market because of the strengths and opportunities we witnessed in the SWOT analysis above. The weaknesses and threats are nothing that cannot be managed. The fact that the beer is Chinese gives it a good platform for launching based on the popularity of Chinese food and products. The strong economic infrastructure in England is equally encouraging and the tourism orientation of England not forgetting its football culture can both be used as opportunities that can work for the market success of the Tsingtao brand. With generous spending on promotional mix and other malcoms, brand identity, brand promise and brand recognition are possible and thus a total success of the Tsingtao brand in the highly competitive England’s beer market is possible. 7.0. 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