International Marketing (MKT343)
Professor Thea BellosSummer 2012
Anh Thi Van Tran (Anh) Kuan-chieh Huang (Jerry)
Piyanuch Kangwankijwanich (Tu) Ting Tseng (April)
AGENDA
1. Missions and Challenges2. SWOT Analysis
3. Business Concepts4. Industry Analysis5. Country Analysis
6. Strategic Marketing Direction7. Overall Strategic Approach
8. Marketing Mix & IMC9. Conclusion
MissionIn U.S. - 170 restaurantsIn 2012 - expand to China:
Shanghai, Beijing, Guangzhou
ChallengesTo understand Chinese cultures and tastesTo follow regulations of commercial TV
SWOT ANALYSIS
StrengthsVariety of menus Appreciated awardsIntensive branches
WeaknessesDeclining market share
OpportunitiesGrowth of food tourism Expanding restaurant industry
ThreatsRising labor costsStrict regulationsNumerous competitors
CONCEPT
Business ModelsBuild partnership with localsMaintain CRMCooperate with governmentSet positioning as “Premium American Dinning”
Key FactorsQuality control, venue selection, venue set-up, staff training, innovation, revenues and sales, and market share
RisksHeavy debt in ChinaRestrictions of foreign investment: to protect domestic companies
INDUSTRY ANALYSIS
Size and Growth TrendsPredict to grow 16.5% annuallyBoost sales (lunch/dinner)Eat out trend:
High income, high quality
Vulnerability to Economic FactorsIncrease restaurant revenues:
Rising household incomesMany business activities
Unstable factors:Global financial crisis High competition in fast food
INDUSTRY ANALYSIS
Technological & Seasonal FactorsGood event = More competitive For example, the weddings, event planning, and celebration have fully influenced on the full-service restaurant’s sale.Public holidays and festivals Beijing Olympics
Regulatory IssuesChina regulations
Food safety supervision Smoking banEnglish menuWaste management
INDUSTRY ANALYSIS
Financial ConsiderationFactors influence on industry revenues
Wide range of industry Variety size of restaurants
Operating costsRaw materials, wages, rentHarsh regulations
Risk AnalysisInflation
Too strong liquidity growthOver demand Mounting input costs
Wages and oil priceNatural disasters
Increasing vegetable price
China is one of the world most growing countries
Competitive Advantages Low labor cost Abundant natural resources Major leaders of international
organizations
COUNTRY ANALYSIS
Economic StatisticsGDP is growing 8% annuallyUnemployment in urban areas are decreasing
from 4.65% to 4.1% Middle class is increasing
from 65.5 mill in 2005 to 80 mill in 2007The government is resisting external pressures
due to country’s benefits of export
COUNTRY ANALYSIS
Government/Political/Legal One-child-family policy: 1.5 bil by
2030 One-party state to control
regulations High budget deficit 1.1% of GDP in 2011 > 1.9%
in 2012 Inflation concerns: Rising interest
rates Effects of joining WTO Having relationship with
other countriesAffecting domestic markets
COUNTRY ANALYSIS
Risk AnalysisOne-party state: Unstable regulationsHigh debt burden: Demand of local
governmentRestrictions for foreign companies
Chinese-foreign equity Joint Venture
Different kind of costsTo educate laborsTo increase labor costs
Corruption: Judicial decisions Contract enforcementProtection of property rights
COUNTRY ANALYSIS
STRATEGIC MARKETING DIRECTION
Marketing Scope Premium full-service restaurantFeatures both American and Chinese foodsOperates in big cities
Marketing GoalCreates & develops brand awareness & reputationExpands all over China
Marketing ObjectivesRevenues: $2.2bil / 20%
growth rate in 3 yearsExpands from 3 to 15
restaurants in 3 yearsEarns 5% of the market
share in 5 yearsEnhances relationship with
government, suppliers, etc.Develops new menu items
STRATEGIC MARKETING DIRECTION
Target customerChinese men & women: age 20 - 55, upper-
middle income, well-educated, live in big cities
Western foreigners: expatriates & tourists
Target competitorsBeijing Little Potato Catering ManagementChongqing Taoranju Catering Culture Zhongshan Seaport Catering Group China Quanjude Inner Mongolia Little Sheep Catering Chain
OVERALL STRATEGIC APPROACH
Branding and positioning statementUp-scale, casual dining restaurant chain that features Western and Chinese foods.
Sales and Channel Strategy The restaurantsWebsite
OVERALL STRATEGIC APPROACH
Market Entry/Expansion Strategy Wholly - owned subsidiaryNo licensingPartner with suppliers
Core Marketing Strategy Word-of-mouth strategy
Buzz, Viral, Social Media, Blog, etc.
OVERALL STRATEGIC APPROACH
Risk AnalysisCultural differenceIneffective marketing communication Intense competitionRisk management
Being aware of threatsUnderstand and respond quickly Differentiation
OVERALL STRATEGIC APPROACH
MARKETING MIX
Product localization•Cut down items in menu•Add Chinese food •Reduce dish size•Support chefs to join culinary contest
MARKETING MIX
Premium pricing 1. Find the highest price target customers could
afford2. Markup on sales > 300%3. Treat branch managers as salespeople4. Evaluate work in progress monthly and annually
MARKETING MIXSelective distributions• Traffic malls• Nice scenery: Top roof or corner
Quality supply chain• Material Requirement Planning (MRP) to minimize
delay• Just-In-Time (JIT) system to keep food fresh • Qualified local suppliers and local distributors to
reduce costs
IMCCreate awareness of value propositions
1. Use exciting message 2. Execute creative media
• Wrap the restaurant
• Distribute invitation cards
• Spread WOM
IMC
Build brand interest and desire
1. Establish sophisticated brand equity
2. Apply PR Marketing• Gift cards for Chinese
icons • Editorial advertising • Renren and Weibo
IMC
Remind brand values1. Implement loyalty programs and CRM
• Free sampling on birthday • Premium gifts• Member card
2. Focus on interactive marketing• Official website• Mobile phone application
3. Launch CSR plans• Harvest program• Event sponsorships
CONTINGENCY PLAN
Best caseGrowth rate and revenues: more than
expectedExpand to other cities/provinces
Second caseGrowth rate and revenues: lower than
expectedDon’t open new restaurants – Keep 3
restaurantsOR slow down expansion rate
Worst caseFail in Chinese marketExit Chinese marketGo to other countries : ex. Australia
CONCLUSION
China is a potential marketCheesecake Factory is developing fast & needs to
expand Expand to China
Earning: $64 mil. USD annual revenues & $13 mil. USD annual net income in the 3rd year
Required budget for 1st year$15 million
REFERENCE
Berggren, D. (2012, February). Enter the dragon – investment risks in China. Retrieved from http://www.tradingfloor.com/China's marketing challenges. (2011, April). Retrieved from http://www.bizcomm unity.comCheesecake Factory. (n.d.). 2011 annual report. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comCheesecake Factory. (2006, March). Code of Ethics and Code of Business Conduct. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comCheesecake Factory official website. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comHoenig, J. (2007). Wise companies prepare for—and minimize their exposure to— risks when investing in China. Retrieved from https://www.chinabusiness review.comMiller, K. (2009). Organizational communication: Approaches and processes. (5th ed.). Wadsworth Cengage Learning. Boston.
REFERENCEOneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource company summary report. Retrieved from OneSource database.OneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource corporate overview report. Retrieved from OneSource database.The Cheesecake Factory Incorporated (NASDAQ: CAKE). (2012, May 29). Business Wire. Calabasas Hills, CA. Tan, F. (2011, June). Chinese now spend 41% of their time online on social networks in lieu of news sites. Retrieved from http://thenextweb.com/asia/Xia, Z. (2012, January). Chinese regulator imposes stricter rules on TV programming and advertising. Retrieved from http://www.screendigest.com/news/
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