Marketing Plan -Chinese Beer

2.3. Competitor analysis (Doyle, 2002).

“China is an enormous country, and the differences in regional customs and lifestyles are huge, 3 or 4 breweries cannot dominate 90% of the...beer market like they can in Japan and the US” (Fitzpatrick, 2004). The Chinese beer market is fragmented with the top four breweries in China controlling 45% of the total market share. China Resources Snow Breweries is the top brewery in China, with an estimated nationwide market share of 15% in 2006, followed by Tsingtao at 13%, Yanjing at 10% and InBev at 7%.  Below is a snapshot of the Competitiors in the Chinese marketplace.

2.4 Porters five forces (Porter, 1998, 1999: Hooley et al, 2008)

1. The threat of new entrants: Beer is relatively simple to produce, international Competitiors: the Chinese market is seeing an increasing amount of foreign firms entering the Chinese beer industry. High cost of distribution network and infrastructure thus leading to high entry costs. Increased consolidation between firms, takeovers and mergers are prevalent in the industry amongst small local brewers acquired by leading manufacturers e.g. China resources acquired Anhui Shengli brewery (Euromonitor, 2009). Global brands may force Airevalley breweries out of market due to an advantage of greater advertising power and larger marketing budgets. Ever changing consumer demands and changes in technology could result in more scope for new entrants to offer something different in the market.
2. The power of suppliers: Increased cost of raw materials, economies of scale increase volume and reduce costs.
3. The power of buyers: Customers have increasing changing tastes, and, in a recession increasing price sensitivity which could harm a premium brand like Airevalley. Beer is readily available and there are various sources of supply, therefore, Airevalley need to work on retaining customers and increasing brand loyalty. Multiple customer needs and preferences (Slocum et al, 2006).
4. The threat of substitutes: change in social habits, increased emphasis on cutting back on drinking to lead a healthier lifestyle. Changing drinking environment, north china moving away from drinking in nightclubs to drinking at home. Drug use in China is increasing??
5. Rivalry amongst existing firms: increased fragmentation and diversification, majority of firms are small to medium sized breweries, 4 large breweries hold only 45% of market share, thus, increased competition between smaller firms. Established firms face market share loss (Slocum et al, 2006).

1.0 Mission Statement: To provide high quality, premium lager beer to the growing Chinese beer market. In particular targeting young, affluent female Chinese consumers in a way which not only promotes the product, but a fashionable and up market image.

1.1 Corporate objectives

1) To be among the top three brands in the premium beer segment where the beer is marketed.

2) To achieve brand recognition amongst female Chinese consumers.

3) To extend the brand to other metropolitan regions of China and introduce other products in the range to additional segments over time. Gain a market share of 14% of the premium market in Shanghai by 2015.

 4.0 Customer segmentation (Bauer and Liu, 2006).

In line with a paper by Cui and Liu, (2001), the Chinese market can be segmented in to the following profiles:

Working poor (55% of population): average income of less than 10,000 RMB, married with kids, factory workers, income spent on necessities, prefer local goods and unwilling to pay for brands.

Salary Class (25% of population): average income of 10,000-20,000, married with kids, willing to pay for brands but not necessarily foreign brands.

Little rich (15% of population): average income 20,000-40,000, educated professionals, willing to pay for brands but do not necessarily prefer foreign brands.

Yuppies: (5% of population) average income78, 000+, smaller families, larger percentage of single people, business owners, most willing to pay for brands and prefer foreign goods.

From the above analysis the yuppie segment of the Chinese market provides a promising opportunity for Airevalley breweries. However, yuppies only account for 5% of the total consumer market in China and therefore Airevalley breweries will follow a 2 segment strategy, first targeting females as discussed below and then yuppies (predominately males 18-34).

                                                                                                                        

Following this the market can be further segmented by age, gender and region Females: this group is becoming increasingly important due to increasing levels of disposable income. Currently, men consume more beer than women however the female market offers an opportunity to tap into a market which is relatively un-catered for. (Mintel, 2009) There are three metropolitan areas where the largest amount of beer is consumed by females: Beijing, Shanghai and Guangzhou. The highest percentage, 40% of all Beijing beer drinkers are female and thus this region provides the greatest opportunity for Airevalley breweries. The needs of this group are light beers, and, an increasing trend towards low calorie, low sugar and low alcohol content. Female consumers can be further segmented into two groups.

16-24 females drink at nightclubs and pubs, driving by brand image.

30-50 year olds predominately drink at formal occasions and whilst dining.

By region.

North China (Beijing and Tianjin)

• See beer as complimenting dining. Largely consumed with food in restaurants, a study noted that 66.3% of consumers in the north consume beer whilst dining (Zheng, 2005).
• North China ranks the highest for purchasing beer and general alcoholic consumption levels (Ciu and Liu, 2000:Yen et al, 2009)

South China:

• Lifestyle in south china promotes drinking with friends and drinking is seen as the best way to express their lifestyle with others.  The climate in the south is dry and hot therefore beers are often used to ‘quench thirst’ and thus preference is given to light beers.

Table 2: extract from IMI consumer behaviours and lifestyles taken from (Zheng, 2005)

NB: What is important to note from this table is that in Shanghai consumer’s rate brand image as more important than the price of the product. This is particularly relevant to Airevalley breweries as a premium priced product.

        

5.0 Integrated marketing 4 p’s (product, place, promotion, and price) (Calder et al, 2003: Lexa et al, 2006)

Ultimately from the analysis it can be seen that the industry is moving towards producing alcoholic drinks for females and that the female market is providing increased opportunities to tap into the Chinese market. With this in mind the following is proposed:

5.1 Brand Character

British beer with a modern twist. Premium and different to anything else designed with female Chinese consumers in mind.  Country of origin as a brand element, perceptions towards the UK will extend to the product and as noted by Keegan and Green (2003 p 415) is “particularly true for beer”. Therefore, a vital part of the brands positioning will be to promote the brutishness of the product.

5.2 Product:  Modified product, low calorie, less sugar light beer, packaged in a fashionable and eco friendly way. Refreshing light lager with an ABV of 3.5%.  New flavours, for example lemon and sweet lime then diversify to other flavours. The use of high quality ingredients is paramount and there is an increasing trend to use organic products which the company will explore (Mintel.

5.3 Place: inner city nightclubs, fashionable restaurants, image is key; the product must be only placed in up market locations in order to enhance perceived quality and scarcity associated with a higher price. Shanghai is an ideal location due to its trendy and up market restaurants and bars restaurants such as Bund 18 will be targeted to ensure the brand is associated with high quality.  

5.4 Promotion: Sponsor high end fashion shows in Shanghai in order to promote brand image. Sales promotion: competitions to win shopping trips.

5.5 Price (Doole and Lowe, 1999):  Premium price justified by quality of product. Intention of marking the price 25% above local premium brands in order to enhance idea of perceived quality and scarcity associated with foreign brands. In total, the brand will be 60% above the price of mass produced, non premium beers.

6.0 Implementation and control

6.1. Budgets

6.2. Expected Expenses: money to be raised from UK profits and private investment estimated cost to adhere to manufacturing changes and product specifications estimated £15million, however, this is only an estimate as real costs cannot be derived from the information provided on the company.

6.3. Expected Revenue: Airevalley breweries will have to sustain low profitability for up to 5years.  Over time the firm can focus on scales of scope to increase market share, moving from Shanghai, first to Beijing and then Guangzhou.

7.0 Action Plan

7.1. Use of an agent to overcome cultural barriers, specifically an agent who knows Shanghai well and has well formed relationships with many of the places the product could be placed.

7.2. Distribution Networks

Highly selective on trade distribution only.  High quality service at all times, clean, stylish glasses and bars trained to sell the product to females looking to try something new. Local distribution is key, target a series of cities rather than the whole nation.

8.0 Control.

8.1. Referring back to the original objectives set out at the beginning, the following control methods will be implemented to ensure the objectives are met.

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