Current Marketing Trends in Hong Kong - Case Study Example

International Marketing I. Executive Summary The research paper is prologue to diversify the organization in international market with taking the reference of Hong Kong Market. The company Old Chang Kee which is an organization dealing in snacks and beverages in Singapore wants to expand their business in Hong Kong market and for that purpose they have appointed a marketing manager to prepare a plan. This plan will give them a brief idea about their overall strategy to launch their product in Hong Kong market. This research paper will include the following factors such as current marketing trends in Hong Kong, competition analysis, marketing mix strategy and the marketing research. Table of Contents I. Executive Summary 2 II. Current Marketing Situation 5 a. Market Overview 6 i.Market Demographic and Needs 6 ii.Market Trends and Target Market Growth 6 b. SWOT Analysis of Old Chang Kee 7 Strengths 7 Weakness 8 Opportunities 8 Threats 8 c. Competitive and Industrial Analysis 8 d. Product Overview 9 e. Key to Success and Critical Issues 10 III. Environmental analysis 10 A. Macro Environmental Factors 10 B. Micro Environment Factors 11 IV. Marketing Strategy 12 A. Mission 12 B. Marketing Objectives 12 C. Financial Objectives 12 D. Target Markets 13 E. Positioning 13 f. Strategy Summary 14 V. Marketing Mix 14 A. Product 14 B. Pricing 14 C. Promotion 15 D. Channel 15 E. Service 16 F. Internal Marketing 16 VI. Marketing Research 16 VII. Financials 17 A. Sales/Revenue (Forecast) 17 B. Marketing Expenses Budget 18 C. Break-Even Analysis 19 D. Profit and Loss Analysis 20 VIII. Controls 21 A. Implementation 21 B. Marketing Organization 21 C. Contingency Planning 21 References 23 II. Current Marketing Situation Old Chang Kee is an organization which essentially belongs to Singapore, deals in snacks and beverages. This organization is known for their curry puffs and other local snacks. Old Chang Kee was established in the year 1956 near Rex Cinema at McKenzie Road in Singapore which is still existing (Old Chang Kee, 2005). Han Keen Juan is the current Chairman of the organization. He is the person who traded his comfortable job with an MNC and bought over the company Old Chang Kee with whatever funds he had. He had merely one objective in his mind that is to transform Old Chang Kee into a successful business entity. Han Keen Juan rapidly placed the organization in the path of success and development with taking the concept of modernizing and re-engineering. He applied novel system and took significant steps to make certain quality standards (Old Chang Kee, 2005). Old Chang Kee promotes its products through various concepts i.e. from kiosks along the road, to supermarket outlets and to modern shopping malls. Old Chang Kee is one of the six winners of the SPBA Distinctive Brand Awards 2005 and also a ‘Singapore Brand Heritage Award Winner’ in the year 2005. The organization is operating with 50 outlets across the island with three in China, two in Malaysia, four in Indonesia and three in Philippines (Old Chang Kee, 2005). a. Market Overview i. Market Demographic and Needs The ‘snack-food business’ essentially considers the middle-age group people and teenagers with a purpose to expand their market. However, Old Chang Kee is an organization which belongs to a “culture business” operating tradition. Thus, the company gratifies to a wide customer demographic from all age groups. The targeted demographic segments are based on the facts of taste consciousness although value seeking consumer for their market segments (Agriculture and Agri-Food Canada, 2008) ii. Market Trends and Target Market Growth The people of Singapore are very much expressive about snacks consumption. Old Chang Kee has a very wide range of products like dried seafood, dried nuts, fried indigenous snacks, curry puffs and potato chips (Agriculture and Agri-Food Canada, 2008). In order to recognize the present market trends in Singapore related to snacks consumption it can be observed that presently Singapore is consuming about 10,000 tonnes of imported ‘retail packed cereal’ as well as ‘potato based snacks’ annually (Agriculture and Agri-Food Canada, 2008) (Table is provided below). Consumption of Imported Retail Packed Snacks in Singapore for the year 2005-2007: Source: (Agriculture and Agri-Food Canada, 2008). b. SWOT Analysis of Old Chang Kee Strengths The company has widespread network of retail based outlets Old Chang Kee diversified their business on a large customer base The company fulfills their accountability towards the society by maintaining quality in their product They have a strong as well as a experienced management team The promotional activities of the organization in the market are quite striking and attractive Source: (Slide Share, 2010) Weakness The organization does not make use of any risk management committee The business which is being operated by Old Chang Kee is essentially a labor-intensive business Variations in foreign exchange rates can create difficulties for the organization in terms of financial aspect (Slide Share, 2010) Opportunities The company has their opportunities regarding their expansion The company can make further increment in their working capital The organization can also increase their outlets in different areas (Slide Share, 2010) Threats The company faces significant threats regarding their product as a result of occurrence of any diseases in relation to food The global market is flooded with many organizations that deal in snacks and beverages, therefore, the company has strong competition The response and preferences of the consumer is unpredictable, so it creates threat for the company Alterations in government rules as well as regulations also create threats for the organization (Slide Share, 2010) c. Competitive and Industrial Analysis Old Chang Kee has tough competition in their operational market from their competitors such as Four Leaves, Prima Deli, Polar Puffs & Cakes Pte Ltd, Jollibean, Mr.Bean, and other bakeries and food retail outlets within the surrounding area of their retail outlets. These organizations are competing in same manner to grab the leading position in the market. The organizations are preserving their quality as well as taste of the products for satisfying the needs of the consumers which in turn can increase the level of competition in the market (Slide Share, 2010) d. Product Overview Old Chang Kee is well known for their curry puffs in the market. The products of the company are quite renowned and preferred all around in terms of quality and taste. The products are easily accessible and available in different ranges with wholesome goodness. The company has also expanded its product range with a purpose to include other snacks, desserts and complementary products such as fish balls, chicken spring rolls, crab claws, sotong balls, sesame balls, corn and yam pies and sotong fritters among others. These products of the company are produced with superior quality standards that are used to produce traditional curry puffs (Old Chang Kee, 2005). e. Key to Success and Critical Issues Old Chang Kee follows the concept of modernizing and re-engineering in their business to take the company in the path of success and development. The company always maintains their premium quality standard in their products. In favor of this they have taken significant steps to implement novel system into their working process. The company also introduced aggressive programs with an objective to become a successful brand in relation to preparing curry puff and other hot savories in Singapore (Old Chang Kee, 2005). III. Environmental analysis A. Macro Environmental Factors In order to analyze the macro-environmental factors, the various environmental factors of Hong Kong are considered which will have an impact on the successful implementation of the marketing plan. Hong Kong region is a major allocation midpoint for products imported from or exported to China and rest of Asia due to its geographic location (Bryant Christie Inc., 2003) The economy of Hong Kong is intimately tied to the rest of the world because of their reliance on international trade. Therefore, it has been assumed that the Asian financial turmoil and the economic downturn both affected Hong Kong in a significant manner. As a result, the consumers of Hong Kong are less preferred to purchase the snacks and beverages, particularly in premium segment. However, Old Chang Kee can conveniently alleviate this difficulty by making available products of various price ranges which will target different segment of consumers (Bryant Christie Inc., 2003). In terms of demographic factor of Hong Kong, it can be identified that the 15-29 years olds characterize the largest consumer group of snacks and beverages. The conventional hard candy which is produced by the local manufacturers is generally preferred by the older citizens of Hong Kong (Bryant Christie Inc., 2003). With regards to technological factor, the increasing usage modern technical apparatus in manufacturing products such as snacks can be considered by the organization in their growth endeavor to the new market. In Hong Kong, Food and Environment Hygiene Department (FEHD) ensures the food related safety. Thus, strict adherence to their guidelines will have to be maintained by the organization in the new market (Bryant Christie Inc., 2003). B. Micro Environment Factors Hong Kong’s confectionery market is mainly surmounted by imports from huge multinational confectionary organizations except few local producers. In recent years, it has been assumed that there is continual decline in local confectionary production because the organizations have either discontinued function or have shifted production services to China. Therefore, there are major possibilities to expand the organization in Hong Kong in terms of confectionary production (Bryant Christie Inc., 2003). C. Competitive Strategy With an intention to survive in the international market and to compete with the competitors the company is using techniques such as Total Quality Management (TQM), Reengineering and Benchmarking. These strategies will help the organization to improve efficiency, pace and quality in terms of diversification of the business in international market. IV. Marketing Strategy A. Mission The mission for this company would be to expand and diversify their organization in the international market for further development of the company (Old Chang Kee, 2005). B. Marketing Objectives The global marketing objectives for the company would be to reach out to the larger number of prospective customer segment and to create awareness about their products in Hong Kong market (Old Chang Kee, 2005). C. Financial Objectives The financial objectives for the company to expand their business in Hong Kong market would be to increase their sales turnover. The company’s objective would be to endeavor for an enhancement of 20% revenue growth after the expansion of business in the new market because there are lots of opportunities available. The competitors are less in number and the demand is high for the snacks and beverages. Therefore, the company can take the benefit of this to earn further revenue (Old Chang Kee, 2005). D. Target Markets Old Chang Kee is an organization which belongs to the “culture business” operational segment. Thus, the company targets the customer from all age groups. The target customer for the company would be based on the available facts of consumer segment in Hong Kong and taste conscious value seeking consumer for their market segments (Bryant Christie Inc., 2003). E. Positioning The positioning strategy of the company would be to make available their products in Hong Kong market in affordable prices although with maintaining their premium quality standards. This strategy will provide them an opportunity to ensure their sustainability and popularity in the Hong Kong confectionary market (Old Chang Kee, 2005). f. Strategy Summary Overall, the company’s objective is to diversify their business in international market and to reach out to the larger number of probable customer segment with a strategy to make available their products in affordable price and with quality maintenance. This activity will assist the company to increase their sales turnover and assist them in their path of sustainable development. V. Marketing Mix A. Product Old Chang Kee is well recognized for their curry puffs in the market of Singapore and in Hong Kong they would carry on with this segment of product. The products of the company are best all around and have been receiving high acknowledgment in terms of quality and taste. They would make available their products to customers in different varieties with wholesome goodness. The company would also diversify its product range with a purpose to comprise of desserts, other snacks along with complementary products (Old Chang Kee, 2005). B. Pricing It would be beneficial for the company to apply the penetration pricing strategy for launching their product in Hong Kong market. According to this strategy, the company would take very low opening entry price often lesser than the ultimate market price (Old Chang Kee, 2005). C. Promotion For the purpose of promotion the target will be to attract various age group and price segment customers towards their product. The strategy would include various media channels such as radio, local newspapers, television and other aggressive campaigns which will help them to promote their products efficiently and effectively in the market of Hong Kong. Aside from this, the company can include “in-store promotion” which is one of the most effective methods for increasing sales of confectionary products (Old Chang Kee, 2005). The budget for promotion will be US$2000 for the company to introduce their products in Hong Kong market which will include different media channel costs such as advertisement in television, radio, newspaper and billboards among others (Old Chang Kee, 2005). D. Channel Hong Kong is a place where approximately 990 retail outlets universally receive confectionary products. These include supermarket chain, department stores, drug stores and convenience stores. The confectionary products are also sold by the 70 newspaper plunks. Usually, ‘mom & pop stores’ stand for an insignificant percentage of the confectionary market. Therefore, there are great opportunities for the company to make available their products in easy an accessible manner (Bryant Christie Inc., 2003). E. Service In terms of service the company mainly will focuses on providing their products to their distributors on time that they will be able to satisfy their consumers. For this purpose, the company can go with the Just-in-Time (JIT) technique to make sufficient amount of products available in the stores (Bryant Christie Inc., 2003). F. Internal Marketing Old Chang Kee would include the process of internal marketing to facilitate enabling culture and empower their employees through allowing innovation, accountability and creativity for their decisions. In internal marketing, the company will also ensure evenhanded recognition and reward. Therefore, it will ultimately encourage the employee in the organization to perform better and create good coordination and cooperation among the departments (Slide Share, 2008). VI. Marketing Research Large multinationals are well recognized in Hong Kong and these organizations lead the confectionary market. Moreover, top companies carry out wide marketing campaigns in order to preserve market share. As an outcome, market entry cost is likely to be far above the ground. However, these costs will not dishearten the company from pursuing growth in Hong Kong. The demand for confectionary products in recent times is augmenting and has seen annual growth of around 5% - 7%. Thus, there will be a major opportunity for the company for further development and to widen their business in international market (Bryant Christie Inc., 2003). VII. Financials A. Sales/Revenue (Forecast) The following sales forecast is prepared for the Old Chang Kee for introducing their products in the Hong Kong market. Sales Forecast in the books of Old Chang Kee for the half year ended 30-06-2012 and 31-12-2012 will be: Figure 1 Source: (Old Chang Kee, 2011) Note: The above sales forecast has been made on assumption (referred as Figure 1) B. Marketing Expenses Budget The marketing expenses budget will include all the expenses which the company might acquire during one year period. Marketing expenses budget in the books of Old Chang Kee for the half year ended 30-06-2012 and 31-12-2012 will be: Source: (Old Chang Kee, 2011) Figure 2 Note: The above Marketing expenses are prepared on assumptions (referred as Figure 2) C. Break-Even Analysis Break even analysis is a concept through which the company, Old Chang Kee would be able to estimate their total output for the year. The main purpose of break even analysis is to determine the output level at which total revenue is equal to total cost (Wright State University, n.d.). Suppose, the estimated Total Fixed Cost (TFC) = $20,000, Price (P) = $10, Average Variable Cost (AVC) = $5. To earn $10000 as total profit, the output quantity required is calculated below (Wright State University, n.d.). Formula For Calculating Break-Even Analysis is: (Output Quantity) Q = TFC + Total Expected Profit Price – Average Variable cost = 20,000 + 10,000 10 – 5 = 6,000 units per annum Source: (Wright State University, n.d.) Note: The break even analysis for the company is prepared on assumptions and the amount has been taken in terms of US Dollars D. Profit and Loss Analysis Through selling goods and services companies obtain money and along with this they have to pay costs in order to create the goods or offer the services. The main objective regarding doing any business is to generate revenue and to earn increased profit. The Profit and Loss analysis in the books of Old change Kee for the year ended 31-12-2012 will be: Source: (Old Chang Kee, 2011) Note: The amounts of total revenue and total cost referred to figure 1 (referred as figure 3) VIII. Controls A. Implementation With regard to the implementation factor Old Chang Kee will put their plan into action. This is the stage where the company executes their idea, policy, strategy and overall plan into work to achieve their mission and objectives. The implementation of this plan for the company will be based upon preparing the international marketing plan based upon the proper environmental analysis of the target market i.e. Hong Kong. A required budget needs to be allocated in order to achieve desired objectives. B. Marketing Organization According to marketing organization, the company will measure the performance of their work. Marketing organizations mainly consider the customer and provide necessary changes according to customer feedback. The company can do this quarterly in a year because it is the first time for them to introduce their product in Hong Kong market. This will lead the organization for further development (Open Process Framework, 2009). C. Contingency Planning Contingency planning is a logical approach for the organizations to recognize what can go incorrect in certain circumstances. This is a planning which would be kept in consideration for Old Chang Kee to avoid those problems and to tackle the problems in future period. Contingency planning will be considered primarily for any requirement of alteration in product preparation (CDC, 2008). References Agriculture and Agri-Food Canada, 2008. The Singapore Market for Confectionary Snacks. Market Size. [Online] Available at: http://www.ats.agr.gc.ca/ase/4541-eng.htm [Accessed February 04, 2012]. Bryant Christie Inc., 2003. The Market Trends for Confectionary Products in Hong Kong. Demography. [Online] Available at: http://69.17.111.188/site/c4/w116/downloads/hongkong.pdf [Accessed February 04, 2012]. CDC, 2008. Contingency Planning. Purpose. [Online] Available at: http://www2.cdc.gov/cdcup/library/practices_guides/CDC_UP_Contingency_Planning_Practices_Guide.pdf [Accessed February 04, 2012]. Old Chang Kee, 2005. Old Chang Kee - The Origin. About Us. [Online] Available at: http://www.oldchangkee.com/aboutus.php [Accessed February 04, 2012]. Open Process Framework (OPF), 2009. Marketing Organization. Definition. [Online] Available at: http://www.opfro.org/index.html?Components/Producers/Organizations/MarketingOrganization.html~Contents [Accessed February 04, 2012]. Old Chang Kee, 2011. Financial Information. Financials. [Online] Available at: http://oldchangkee.listedcompany.com/financials.html [Accessed February 04, 2012]. Slide Share, 2010. Financial Analysis of Two Companies in Foam; B Industry. SWOT Analysis. [Online] Available at: http://www.slideshare.net/brendahj/financial-analysis-of-two-companies-in-the-fampb-industry [Accessed February 04, 2012]. Slide Share, 2008. Internal Marketing. Definition of Internal Marketing. [Online] Available at: http://www.slideshare.net/engineer_Sood/internal-marketing-presentation [Accessed February 04, 2012]. Wright State University, No Date. Break Even Analysis. The Algebra of Break-Even Analysis. [Online] Available at: http://www.wright.edu/~tdung/BE_analysis.pdf [Accessed February 04, 2012]. Read More