3.0 Environmental Analysis
3.1 Political
The political system of China takes place in a framework of communist state. China officially gaining sovereignty on October 1949, it is Multi - Party cooperation system government, majority politics has been dominated by the Chinese Communist Party (CCP) and other eight small Party controlled by CCP (Dickson 2003, 2). In other words, China almost is one – party dictatorship country. Actually, China’s one – party dictatorship has the characteristics of its own, for example: democratic dictatorship is for the whole society and against the criminals. In addition, China has its own executive branch, president and vice president elected by National People's Congress for a five-year term (eligible for a second term); elections last held on 15-17 March 2008 (next to be held in mid-March 2013); premier nominated by president, confirmed by National People's Congress (East & Southeast Asia: China 2010).
Moreover, Chinese government welcomes foreign company to invest in China; however, they think foreign company and Chinese company need to have fair competition environment and will not has preferential policies for foreign company (Luo, Qiuzhi, and Binjie 2010, 68).
3.2 Economic
China is the developing country, with it becomes major player in the global economy, thus it affects the global economic developed trend (International: Emerging markets reshape global economy 2010). China describes as a socialist market economy (Fleccher and Linden 2008, 133). China stood as the second-largest economy in the world after the United State in 2009 (East & Southeast Asia: China 2010). China GDP keep increase every year, in 2009, grew of 8.7%, the world’s fourth; in addition, economist forecast over the next two years, China will continue to grow at an extraordinarily fast rate, with GDP rising by 10.1% and 8.9% in 2010 and 2011 (Thinking of boys 2010, F2). In the few years, Chinese government also implements some economic policies to stimulate consumption, for example, reducing high domestic saving rate and correspondingly low domestic demand (East & Southeast Asia: China 2010). This policy can stimulate consumption behavior and now Chinese gradually increase their living standard and level of consumption, they are willing to spend money on maintaining good health, Kamwo as production of health Products Company, which has good prospects for economic development.
3.3 Cultural
Chinese culture has more than five thousand years, traditional Chinese medicine (TMC) has more than two thousand years, and thus, it is an important part of Chinese culture (Wang 2010, 532). With Chinese pay more attention on health, Chinese traditional medicine become a focus, because they think the role of traditional Chinese medicine to treat the root cause are better than Western medicine. Therefore, in China, traditional Chinese medicine gradually become popular, for example, massage, acupuncture, these are known with people and popular in the world. Kamwo Company is based on traditional Chinese medicine product, when it extends its products in China; there will be a good market response.
What’s more, China tolerance with hospitality and welcome foreign cultures, Beijing Olympic Games in 2008 and the World Expo in 2010 Shanghai are a good example to prove that. Therefore, culture diversity which is showing in China.
3.4 Technological
Technology has been becoming more and more significant and it is a necessity in our daily life. It plays a basic role and improves the quality of life. In China, Online shopping becomes more popular and it is a part of people’s daily life, consumer behavior towards continued use of online shopping (Wang et al. 2007, 396), for example, Taobao is the biggest online shopping website in China, it sells thousands of products which provide by consumers themselves. According to a China Internet Network Information Center (CNNIC) survey, online shopping is ranked the 12th purpose for people using the Internet in China (Nelson, Michael, and Troy 2009, 321). Therefore, it is a good for the Kamwo to use as a tool to entry the China market. What’s more, Chen et al. (2010) claimed that China has a sound network system. It also has 14.156 million Internet hosts and 298 million Internet users, they rank seven and one in the world separately (East & Southeast Asia: China 2010). People can search everything they want and need. Kamwo also can use China network system to create advertising which can get the concern of consumers.
3.5 Environmental
Nowadays, with Chinese government promotes a harmonious society and protects our environment, people are growing awareness of environmental protection, for example, people like to use green bag to instead of plastic bag (Zhao et al. 2009, 399). Therefore, Kamwo need to pay attention on product to be involved in environmental protection.
3.6 Legal Environments
Chinese legal system can go back to ancient times, the period from 1949 to the mid- 1950s was the period when China’s modern legal system was first set up (Thinking of boys 2008, 513). In the 1954, the Constitution of the People’s Republic of China enacted later defined China’s political and economic system, citizen’s rights and freedom, set the standards for the organizational structure, functions and powers of state organs, and established the basic principles for China’s legal system, thus initially laying the foundation for the rule of law in China, in addition, Modern China legal system is based on Western legal system (Thinking of boys 2008, 513). With China society develops, government pays more attention to the integrity of legal system, to speed up legislation on traditional Chinese medicine is one of the suggestions are provided by government (Xu 2010, 328). When Kamwo imports China market, China medicine office will be strict requirements on products.
4.0Competitive Audit
4.1 Existing competitors
4.2 Emerging competitors
5.0 SWOT
5.1 Strengths
Products:
-They have found a niche in the market, able to provide Traditional Chinese Medicine to health conscious Westerners.
-Has been operating for over 35 years and is a well respected family business.
-Personnel are able to communicate effectively in both English and Chinese.
-Kamwo’s Chinese herbal products are respected and are of the highest quality standards.
-Products are tested
-Products come in vacuum sealed bags, customers do not have to prepare their Chinese medicine.
Price
-Kamwo offers extremely competitive prices as they are a large business
-Prices are relatively cheap and so most members of society are able to afford their products.
-Coupons and discounts are offered regularly for many products.
Place
-Stores are located in the New York area
-Online stores allows for people to order products easily and from their own home.
Promotion
-Kamwo has a YouTube account with Dr’s and academics often speaking on the benefits of Kamwo herbal products and promotion of products from their store.
5.2 Weaknesses
-The company is located on the East Coast, yet to expand and open stores in other parts of the country.
-Shipping fees are expensive and so may deter people in other regions of the US or in other countries from buying Kamwo products.
- Products do not appeal to all members of society, only those who have an interest in Chinese Medicine, select target market.
-Most Westerners have limited knowledge about Traditional Chinese Medicine.
-Limited amount of money spent on promoting their business or products.
5.3 Opportunity
-Traditional Chinese medicine is well respected within China and commonly used by the Chinese people.
-Opportunity to expand business, create partnerships with hospitals to supply Chinese medicine to patients.
-Kamwo could modernise Traditional Chinese Medicine, the company’s use of granules and tablets could be appreciated in China.
-Will allow every day Chinese people to have access to quality and safe Chinese medicine.
-Kamwo is a respected business that offers quality products, this may cause a renewed interest in Traditional Chinese Medicine for Chinese people, especially the younger generations.
5.4 Threats
-Many politicians and Chinese scholars have attempted to phase out Traditional Chinese Medicine in China in favour of Western medicine.
-Controversy over the effectiveness and healing power of Traditional Chinese Medicine. There is inconclusive evidence to determine if acupuncture and other Chinese methods are effective.
-There may be limited need or demand for the Kamwo herbal pharmacy in China, older generations may prefer to prepare their own herbal medicines.
-A western company may find the transition of business from New York to China very difficult
-Use of endangered species in Chinese medicine has faced strong opposition and has resulted in black market activity. This has resulted in negative opinions on Traditional Chinese Medicine.
-Strong cultural beliefs about the strength of tiger parts in medicine has meant sale of such items in the open markets, regardless of laws in China introduced to protect endangered Sumatran Tigers.
-Prices may be too high for some members of the Chinese community, the company may not experience the same profits they receive in New York and other developed countries.
5.5 Implications
In the analysis the internal strengths and weaknesses of the company were examined along with the external opportunities and threats the company would face. Kamwo is a highly respected company that has found a niche in the American market and has capitalised on it to create a profitable and successful business.
The quality products they offer and the unique combination of Chinese and Western influences in their business creates many opportunities for Kamwo. The company has the opportunity to expand their business into China and allow the Chinese people to experience a modernised version of Traditional Chinese Medicine. If the business was to expand, Kamwo Herbal Pharmacy’s could create partnerships with hospitals and provide them with herbal medicines to aid in treating their patients. Expansion opportunities for the company in China are endless.
There are several threats that will affect the Kamwo pharmacy and its efforts to move into China. Several important political figures in China are opposed to Traditional Chinese Medicine and there have been efforts to phase it out of the Chinese culture.
6.0 Marketing objectives
Marketing objectives are the goals can be achieved by an organization's overall marketing program just like: sales, brand expands, or profitability. A good objective must be measurable, attainable, and socially significant.
6.1 Branding and Positioning
Kamwo has been a Chinese Herbs practitioner for over thirty years. Their experience spans four generations which has helped them to build a solid reputation, it is New York’s most reliable and knowledgeable Traditional Chinese Medicine (TCM) Herbal Pharmacy. (About us n.d.)
Kamwo is committed to creating an environment which fosters the exchange of knowledge and ideas from members of the Traditional Chinese Medicine (TCM) community. They are currently in the process of expanding their Grand Street facility to incorporate more retail space, expand their shipping area, and establish a state of the art FDA GMP compliant granule dispensary. They invited customers to come to see the back of their house, take a look at their facilities. This expansion is to prepare them for the growing demand of the TCM profession. (The future n.d.)
- Segmentation and Target Markets
Today, they supply services to hundreds of Traditional Chinese Medicine (TCM) practitioners across the United States, Canada, and Europe. Pharmacy personnel offer assistance in English and Chinese (Mandarin/Cantonese). At Kamwo, they are willing to providing high-quality, efficient service to suit the individual needs of each customer. (About us n.d.)
6.3 Product Development
At Kamwo, in keeping with their commitment to safety and quality, they have confirmed through third party independent US laboratory testing, at the same time, their vacuum packs pouches have always been and continue to be completely BPA-free. In addition, their vacuum pack pouches and vacuum pack filling facility were approved by the FDA. The BPA testing was performed at the National Food Laboratories in California. (Testing and Quality n.d.)
Besides this, in order to make some herbs are becoming easier for consumers to take as they are made into capsules or ready-to-eat supplements. (Chinese herbs catch on big in US 2007)
6.4 Media Relationships
Kamwo primarily use public relations to target their mass audience, through press releases, website information, catalogue distribution and product launches. Just like, Kamwo has its own Herbal Pharmacy Online Store, no shipping cost and no waiting. If consumers are not satisfied with an item they purchased from Kamwo online strore, just send it back, or bring it back to their New York store. (Kamwo Herbal Pharmacy Online Store n.d.)
6.5 Target market
Kamwo started as a small family-owned and operated Herbal Pharmacy in New York since 1973, and now more and more consumers are non-Chinese, but according to the long history with Chinese Herbal, the most customers are always Asian, especially Chinese. (About us n.d.)
7.0 Segmentation Profile
7.1 Geographic
For entering China market, the target market would be divided into different geographical parts such as provinces, cities, metropolitan areas and regional areas. Herbs are the traditional Chinese products, and even a lot of Kamwo herbal products also manufacturing in China, because herbs are special local product in some provinces of China, such as Guangxi, Shandong and Hunan provinces, in those areas, herbal market is being matured. Base on this, Kawmo needs to make their target market away from those areas. Some metropolitan areas like Beijing, Shanghai, and Guangzhou are suitable target market for Kamwo.
7.2 Demographics
The population of China is 1,338,612,968 in 2009, there are three different age groups in Chinese age structure: 19.8% of total are age from 0-14 years (male 140,877,745/female 124,290,090), 72.1% of total are age between 15 and 64 years (male 495,724,889/female 469,182,087), the others 8.1% populations are 65 years and over (male 51,774,115/female 56,764,042). (China Demographics Profile 2010 2010)
To Kawmo Herbal Pharmacy, they need to target on people from 30 to 45 years old in China. Those people always pay more attention on their work, not enough time to take care of themselves; vacuum packs of Traditional Chinese Medicine from Kawmo are easy to take which are vey convenient for these people.
7.3 Psychographics
With the literature value of 4000 years of Traditional Chinese Medicine treatment of disease, it provides a good opportunity for evidence-based research and development of natural products, dietary supplements, botanicals, and medicines by scientific researchers. (Chinese herbs catch on big in US 2007) Some advanced science and technology of Kawmo have been used by the traditional Chinese medicine treatment. These help Kawmo to attract more consumers not only in China but also in the world.
7.4 Benefits
Some researchers have made groundbreaking discoveries of traditional Chinese medicines. For example, wild ginger and soy have been shown to inhibit cancer. As a result, the Western medical community has become more accepting of herbal remedies. (Chinese herbs catch on big in US 2007)
8.0 Marketing Mix Strategy
8.1 Product
8.1.1 Product positioning strategy
Kamwo has been a source of Chinese Herbs and practitioner supplies for over thirty years; it provides herbal formula services to thousands of Traditional Chinese Medicine professionals and their patients across the United States, Canada and Europe (Kamwo Herbal Pharmacy. n.d). Kamwo is selling not only a wide variety of quality-tested herbal products (basic products), also carrying accessories for massage and physical healing such as acupuncture needles, cupping devices, and much more (augmented products). Kamwo even has books and DVDs for sale in order to educate people about the advancement of Chinese Medicine (augmented products). Kamwo also has professional practitioners to work for Kamwo itself and to keep in touch with its own customers and patients, as well as provides courses related to acupuncture and traditional Chinese medicine (potential products). With these high-quality products and professional services provided, making Kamwo the largest herbal pharmacy on the East Coast (Kamwo Herbal Pharmacy. n.d). However, it can be a challenge for Kamwo to expand its operation in China, because the invention and application of Chinese medicine has a history of thousand of years, there are more than hundreds of Chinese medicine pharmacy running business in China. The word “Chinese medicine” appeared only after western medicine was introduced into China, which aimed to make a difference between the two (History of Chinese Herbal Medicine n.d.). Kamwo does not see a clash between Chinese and Western medicine, and thus it keeps a mortar and pestle in both worlds; it can be an opportunity to expand Kamwo’s business into China because there are people still either believe in Chinese medicine or believe in Western medicine (Kleinfield 1997).
8.1.2 Branding
Brand names are a critical element in making an impact on the customer. A good brand name in Chinese should have desirable connotations, desirable sound and tonal associations and attractive calligraphy (Fletcher and Brown 2008, 534). The name “Kamwo” was Cantonese and spelled in English, the meaning of Kamwo in ancient Chinese prose refers to auspicious things. Kamwo is started as a Chinese family-owned and operated herbal pharmacy (Kamwo Herbal Pharmacy. n.d), therefore the new stores in China would not have problems with using the brand name and the logo.
8.1.3 Packaging
Protecting the product is particularly important in international marketing as the product usually travels longer distances. Kamwo has used vacuum packing technology for many years, this vacuum packaging is BPA-Free, hygienic, tough, no refrigeration required, and can be shipped to the patients, also provide patients convenience for traveling away from home (Kamwo Herbal Pharmacy. n.d). However, the company in US carries over 500 pharmacy grade raw herbs from throughout Asia, the expansion of operation in China would make the shipping distances shorter. Considering environmental problems, Kamwo charges extra for packaging as little as $.50 to $1.00 per pack of raw herbs (Kamwo Herbal Pharmacy. n.d). The eco-friendly environmental activity would increase reputation and improve social image to the company in Chinese market.
8.2 Price
8.2.1 Price Standardization
The range in price of Kamwo depending on the plants and roots involved, normally it is ranged from 80 cents to over $100. Mint leaves, for instance, costs about 80 cents an ounce while the same amount of ginseng costs about $12. Kamwo also provides clinical services such as massage ($70) and acupuncture ($75) – all licensed and insured by the state of New York (Downtown Healers: Chinatown’s Alternative Medicine 2004). Kamwo must take into account exchange rates, consumption patterns, competitions and sales taxes imposed in China, local costs of raw herbs can be decreased due to shorter distance of shipping; China, as a collectivist culture, negative outcomes of a price increase or decrease are more accepted by the individual and are not as likely to be blamed on the retailer or other party (Fletcher and Brown 2008, 661). Thus, the prices in the new stores should be considerably set mostly lower to create the long-term business in China.
8.2.2 Promotional Pricing
Kamwo offers monthly specials, coupons and free shipping during promotions, the sales price usually helps customer save from 20% to 50% from the market price, Kamwo provides online ordering, as well as combination kits and packages, which are cheaper than purchasing individually (Kamwo Herbal Pharmacy. n.d). The methods can be used for the new stores, and the transaction equipment should be ready.
8.3 Place
8.3.1 Customer Service
When a non-Chinese customer comes in, the staff of Kamwo give them extra instructions, they print out pamphlets on how to prepare herbal medicine, for examples, do not drink the soaks as they are made just for bathing in. The reason for making these pamphlets is because most of Chinese customers tend to boil the herbs loose, but for squeamish Western customers who do not want to know what is in their tea, and do the wrong things such as eating the herbs rather than straining them. Kamwo has also hired other English-speaking herbalists to talk to non-Chinese customers to expand its market for all things herbal (Barrett 1998). Also, Kamwo has this policy that no-hassle returns, it the customer is not satisfied with a purchased item, just send or bring it back (Kamwo Herbal Pharmacy. n.d). The level of customer service provided to customers in Chinese market tends to be higher than the level in the domestic market. This is because Chinese customers know better than Western people about the Chinese herbal medicine.
8.3.2 In-Store Facilities
There is another seven-room store owned by Kamwo, which allows customers walk through a glass door and into a tranquil, wood-floored waiting area. After relaxing with a hot cup of cinnamon plum tea, customers can enjoy a massage or other clinical services (Downtown Healers: Chinatown’s Alternative Medicine 2004). This idea can be considered to utilised in the new stores and it is advised that playing some quiet and nice music around the reception desk while waiting, more magazines or newspaper, and chairs or sofa, with a space so that customers can enjoy their waiting time with pleasure.
8.4 Promotion
8.4.1 Umbrella advertising
As TV advertising is one of the most directly method to response to communicate with new target market but it can be a high cost. Kamwo in China should promote its new store though advertising in peak time of a weak/day. Local advertising should run few months before the actually opening day. Advertising smartly could prevent extract cost and attract target market more effectively.
8.4.2 Local advertising/ Sales promotions
Tourism is the pillar industry of China economic development, in the next 10 years, China tourism will become the first inbound country and the fourth outbound country. Therefore, local advertising in some local magazine and newspaper would more easily attract tourist attentions to learn Chinese traditional cultures such as herbal medicines (Report on China Tourism Industry 2010). Moreover, Kamwo should co-operate with some local travel agents or health magazines who would propagandize their seasonal promotion and short-term discounts in order to attract more tourists or local customers.
8.4.3 Public Relations
Kamwo creates a community for people to share the experience and knowledge they have learn about the traditional Chinese medicine, Kamwo have donated its time and resources to furthering education within the field of Chinese medine, to extending access to healthcare, and to promoting professional integrity. Kamwo has boaden its education through some meetings and social network such as Facebook, Youtube to help people learn more; Furthermore, Kamwo also offers pharmacy tours for practiotioners and students, which includes an overview of the pharmacy as well as an inside look into the cooking facility (Kamwo Herbal Pharmacy. n.d). Those special Kamwo management styles are related to social responsibility and give social benefits in terms of creating a better image from the customers.
9.0 Implementation and evaluation plan
9.1 Implementation Plan
The table below shows the implementation plan of Kamwo in expanding the operation into China. The implementation plan is started from November 2010 until October 2011. This implementation plan is used to help Kamwo manage and monitor the implementation effectively.
9.2 Evaluation Chart
Evaluation is the process of monitoring in order to help the mangers to make a decision in the company. It aims to help the company to run their business activities better and more effective. The table below shows the evaluation of Kamwo outlined on what should be evaluated, how it is measured, the evaluation frequency, and the person in charge to do the evaluation.
10.0 Conclusion
After a careful analytical study of China’s political, economical, cultural, technological, environmental and legal environment, we deem that China is a feasible and viable country for the Kamwo business to enter. With an open economy environment and low trade barriers, it would hold minimal implications for the Kamwo to enter the China market.
11.0 References
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12.0 Meeting Log
