2.1.1 Market Share
Currently, there are 3 main Chinese musical café separate the share in middle-to-south Malaysia market which are WoW Café, FengYun Café and FeiYiBan Café. From the following pie chart show that Halo Café was getting the most percentage in the market share. The market share of Halo Café was 38% in 2001, but since the year 2001 Halo Café was opened their forth branches. In term of this reason, the market share is growing to 45 percent. WoW Café have 2 branches in State Selangor and Wilayah, thus the market share is estimated at more than 28 percent. The following holders are FengYun Café with 16 percent of market share, and FeiYiBan Café with 8 percent. Others Café account for the rest 3 percent.
2.1.2 Target Market
The total population of Malaysia was 23.27 million, and Chinese Group was the 35% compared with other groups of people. The main group of people’s that halo café concerned are Chinese people whatever class or age.
Recent years, more working peoples are likely to seek a place that has a good environment, music lover likes to seek a place to enjoy the music and also, young people likes to sun for the idol. Thus, Halo Café depends of this reason and composed their customer in several segment:
- Talent or creative singer who likes to show their talent on the stage. Recently years, creative songs are very popular in whole Malaysia school.
- The concept of Halo Café is considering the indoor and outdoor environment. Due to this reason, the well atmosphere not only can attract drinker but also student. Due to the well atmosphere, Halo Café can be allocate in healthy environment, thus family group are the another group of consumer. On the other way, one of the missions of Halo Café is encouraged student come to enjoy and wants their parents feel at ease when children go the place.
- Group of people who like to celebrate for every festival and birthday. As we known, more recent year people are likely to concern about the celebration, such as festival and birthday.
- Working peoples who likes to relax after a whole day working.
- Music Lover
- Young people who like to run for idol.
2.1.3 Competitors
The major competitor that for Halo Café is WoW Café and the following competitors are FeiYiBan Café and FengYun Café. WoW Café and FeiYiBan Café established at the early stage of the development of Chinese musical café and there are quite popular among consumers with image and service. Especially WoW Café, the owner was the popular Chinese singer in Malaysia who is A-Gu Tan Kheng Seong. And there have 2 branches in Malaysia which in state Selangor and Wilayah Persekutuan Kuala Lumpur.
Recent years, FengYun Café and FeiYiBan Cafe were using high salary method to recruit more talent’s singer to their place, that including the singer in Halo Café. In term of talent’s singer, there can present a perfect performance for their customer in order to increase their market share.
Compared with its competitors, who have good reputation in Middle-to-South Malaysia, we were facing overriding for our competitor although we still maintain the position in the market. Therefore, Halo Café has to pay much attention to the reinforcement of its brand image and maintain their position in market.
2.2 External environment – macro-environment
2.2.1 The economy
The gross domestic product (GDP) in Malaysia grew at 8.6% in 2000, mainly on the strength of double-digit export growth and continued government fiscal stimulus. Higher export revenues allowed the country to register a current account surplus, but foreign exchange reserves have been declining - from a peak of $34.5 billion in April 2000 to $29.7 billion by December - as foreign investors pulled money out of the country. Despite this development, Kuala Lumpur is unlikely to abandon its currency peg soon. An economic slowdown in key Western markets, especially the United States, and lower world demand for electronics products will slow GDP growth to 3%-6% in 2001, according to private forecasters. Over the longer term, Malaysia's failure to make substantial progress on key reforms of the corporate and financial sectors clouds prospects for sustained growth and the return of critical foreign investment.
According to the economy downturn this recent year, most consumers does not have extra money go to consume in other entertainment, it can be say the consumer buying behaviour would be change.
2.2.2 Sociocultural factors
Malaysia is truly multicultural, and one of its greatest resources is its rich cultural diversity. Malays number around half of the total population of over 21 million (58%), while the other half comprises mainly of Chinese (27%) and Indians (8%). Other indigenous groups (7%) include the Ibans, Bidayuhs, Kadazans and Muruts which are often found in Sabah and Sarawak.
The Chinese population just has 27% in the market, most of them are staying in city. From the aged population structure in Malaysia, we can find that there have 34.5% aged 0-14 peoples in market, 61.35% aged 15-64 and 4.15% in aged 65 and over. But, due to the high education level and income level of Chinese people, they’re willing to pay more and get the satisfaction.
On the other hand, most of people from Terengganu and Kelatan are Malays; most of them cannot go to the place of entertainment and drinking under the Muslim theory. Thus the musical industry was hard to entry those market in order to increase the market share.
2.2.3 Political-legal factors
There have 13 states in Malaysia, and each state and their own Sultan responsibility to control. And also the political party, thus the different regulation when occur in Malaysia market.
There have a lot of political party in Malaysia such as Party Islam Se-Malaysia or PAS [FADZIL Mohamad Noor], Democratic Action Party or DAP [LIM Kit Siang], and Malaysian People's Party or PRM [SYED HUSIN]); UMNO [MAHATHIR bin Mohammad] and so on. For the venues of entertainment, its quite hard entry to the state Kelatan, it’s because Kelatan was under controlled by PAS.
On the other hand, even though Johor was the second more population states in Malaysia, but it’s was very hard to get the license of entertainment. Thus, the understanding for all regulation in each state was bringing the treat for each place of entertainment.
2.2.4 The natural environment
The natural environments that influence the Halo Café can be separate into 3 parts which are raining season, raw material supply from Taiwan and the restaurant around them. Even thought there have no four seasons in Malaysia, but there have a raining season in the end of year. People do not like to go out when raining day.
On the other ways, the quality of drink material come from Taiwan could not maintain their quality. It cause can’t and hard to maintain the product quality for consumer.
Besides that, there have too large number of restaurant in whole Malaysia. Family re-union or dinner with large number, they would not prefer the place of Halo Café even though the place has a well atmosphere. Normally, they would like to consider the price and space, not consider the atmosphere. Thus, Halo Café misses out those groups of customers.
2.2.5 New Songs factors
Halo Café was the place that has a well atmosphere and music. There have more than thousand Chinese songs in this market, so the talented singer also must learn to sing those of the popular song. When any new song or famous people album was come to the market, the talented singers must go and learn. Sometime of time, singers do not renew their song and still maintain the old song. Consumer will feel boring when they come to consume in Halo Café.
2.3 External environment – industry level
2.3.1 Market Overview
Musical Café was position in a growing stage in the market, we can discover that there just have about 15 musical café in whole Malaysia. Compared with others kind of entertainment industry, Chinese musical Café was an attractive business in this market. Most of the musical café are to get gather in middle-to-south Malaysia, so it cause the entire Café situate in a competitive position.
For those album singers, when they want to promote their new album, the first choice that they will choose was musical café. It’s because the stage can let them show their talented. Nowadays, every album singer must have their own talented or else they will easy to kick out of people mind. On the other hand, there have more music publishing company in this market such as Rock Record Music, Global Music, EMI, BMG, Warner Music and etc. For those musical café likes to use the relationship in order to invite the famous singer from that music publishing company. It can be say “Value Exchange”, what the musical café wants are increasing the selling, brand awareness and increase the market share; and in music publishing company view are wants to promote their singer album in market in order to increase their image for consumer mind.
Nowadays, most parents concerned about the environment that their children going. An environment creation was an important parts for every musical café, thus we can found that the environment for each musical café was almost the same. Besides that, younger people likely to run off their idol nowadays, musical café were the way that let them close to their idol.
The following chart shows the current and future market for Halo Café. We can see that the selling in each Halo Café are growing up every year, this indicated that the market is really active.
2.3.2 Competitive Overview
There have 3 main competitors for Halo Café which are WoW Café, FengYun Café and FeiYiBan Café; those of them are allocating in middle-to-south Malaysia. The market share of Halo Café in musical café industry is 45 percent, WoW Café getting 28% market share. The following holders are FengYun Café with 16 percent market share and FeiYiBan Café with 8 percent market share.
The product and service are same with entire competitive café which are entire group of target segment, but the target market of FeiYiBan Café was not same as others. The target market of FeiYiBan Café are student, because the prices was cheaper than others competitors.
Halo Café was getting the more market share in this competitive market with 45 percent, but it does not means there can maintain their position forever. The following competitor are usually do the improvement of their innovation skill in order to compete with other competitor and get the more market share in this competitive market. Moreover, all the competitor target distribution in future is focus in others state, therefore Halo Café has to pay much attention to the reinforcement of its brand image.
Promotion strategy was the popular strategy in this competitive market, especially seasoning festival such as Christmas Eve, National Day and etc. On the other way, there are also likes to establish the membership for their loyalty customer.
From the threat of entrant in musical café industry are still considered to be high, despite the high cost of developing and skill know-how. But if the threat of new entrants is low, it will cause industry position in unattractive.
2.3.3 Customers Overview
According to industry analysts, customer service is thought to be of paramount importance in achieving customer loyalty. Recent years have also seen a considerable increase in the range of services offered. A large range of services can provide competitive advantages in economies of scale and scope.
To have understood the behaviour of customer, we specific composed the segment as below:
Demographic perspective
Age 14 to 18, 19 to 24, 25 to 40, 40+
Gender Male, Female
Family life cycle Young, single; young, married, no children; young, married with children
Income MYR 10,000 and over
Occupation Professional and technical, managers, officials, clerical, sales, students
Education high school graduate; college; University
Race Chinese and Malay
Psychographic perspective
Social Class working class, middle class, upper middles, lower uppers
Lifestyle music lover, active, comfortable
Behavioral perspective
Occasions Regular occasion, special occasion
Benefits Quality and service
User status potential user, first-time user, regular user
Loyalty status medium user, strong user
Readiness stage aware, informed, interested and desirous
2.4 Critical success factors
An industry’s critical success factors concern the product attributes, competencies, competitive capabilities, and market achievements with the greatest direct bearing on company profitability. From Halo Café, the key success factors can be divided into four categories which are:
2.4.1 Skill Related
Skill and knowledge transfer was a factor that other competitor never had. We have four branches are under headquarter in Kuala Lumpur, thus headquarter can easier to transfer their skill and knowledge to each branches. Even the talented singers, they can rotate their singers in every state, it can give some new image for each state of customer. From the skill related key success factor, Halo Café has an ability to develop innovative performance in each festival or special performance such as concert and competition.
2.4.2 Marketing-Related
Halo Café can also as a part of service-oriented industry. Though their reliability, responsiveness, assurance, empathy and appearance the employee of Halo Café can positively enhance the perception consumers have of the service quality of the company. Both of the actions and morale of employees are fundamental to a high-quality delivery of the service and influence consumers’ satisfaction with a service. The five star services are giving the brand loyalty for the entire customer.
Due to have an attractive performance image for customer, we need to maintain our real strength in order maintain the market share or increase it.The stage in Halo Café was a pretty good space for present the own talented. A well uniform design can increase the awareness for customer. From the uniform in Halo Café, it’s creating a fashion design (orange kerchief, black shirt, black jeans and black apron).
2.4.3 Organizational Capability.
Halo Café chooses its employees according to strict rules. Basically they should be experienced. A superior workforce talent can improve the company performance.
Due to the company have four branches in market, it can collect a lot of information from others business in order to increase the managerial know-how. This is the well method that other competitors never had.
2.4.4 Distribution-Related
Halo Café has four branches in current market. On the other way, we are join the franchising association Malaysia in last year 2002 and it become the only one musical café franchising member in Malaysia. These are the key success factor that other competitor does not have. A strong network can build a good image and increase the awareness for their brand.
2.5 Internal Capabilities (Strength and Weaknesses)
Rating Degree of significance of the strength or weaknesses
5 Extremely significant
4 Quite to highly significant
3 Significant
2 Reasonably significant
1 Not very significant
3. Problem and opportunity statement
The existing competitors and new entrants would directly influence the development of company. In fact, if the threat of new entrant is low, it will directly bring the whole market position in unattractive. The treat of government regulation and economy are obstructing the development of Halo Café because nobody can control the entire obstruct.
Good relationship with others music publishing company was gives an opportunity for Halo Café. A perfect performance or mini concert can increase the awareness for customer, hence any singer in any music publishing company who wants to promote their new album that can be choose Halo Café. Halo Café welcome the individual joint venture, it bring an opportunity to get more information from material and expanding the product line.
4. Marketing Objective
The specific objective of Halo Café can be separate into three categories which are corporate objective, strategic position and marketing strategy.
4.1 Performance objective
- To achieve 100 percent total customer satisfaction everyday, in every café and for every customer.
- To increase sales in each café, specifically in both Halo Café Malacca and Halo Café Muar, by 15 percent based on last year sales performance
- To maintain an average earnings per share growth rate of 15 percent per year
- Attractive economic value added (EVA) performance
- To provide all our employees with challenging and rewarding work, satisfying working conditions, and opportunities for personal development, advancement, and competitive compensation
- Stable earnings during periods of recession
- To establish and maintain a market leadership position in the competitive market
- To achieve a 20 percent return on equity
- To qualify the conditions of ISO 9002
4.2 Strategic position
Normally, there are three useful main concepts and techniques will be used in discussing the strategic position, which are Product Life Cycle (PLC), Product Portfolio models and the concept of sustainable competitive advantage. In this case, PLC that means ‘the course of a product’s sales and profits over its lifetime’ has been chosen.(Kotler & Armstrong, 99)
According to the PLC, Halo Café is currently position at maturity stage which is having a high profit with a peak sales and average costs. In the other words, Halo Café is gradually approaching to the decline stage that will be caused a market share minimizing and profit declining. Hence, in order to solve the problem, a life extension is required.
Therefore, Halo Café is purposely placed an emphasis on developing a large number of branches around Malaysia. Especially the main cities in West and East Malaysia such as Penang, Kuantan, Johore Bahru, Kota Kinabalu and Kuching (refer to figure 4-2) Halo Café will expect to achieve 15 percent of the sales return.
Figure 4-1 Product Life Cycle
Figure 4-2 Malaysia map
4.3 Marketing Strategies
Marketing strategy is the marketing logic by which the company hopes to achieve its marketing objectives ‘Kotler & Armstrong’. There are two methods that can be used in this case which are Ansoff product-market matrix and marketing competitive strategy options
4.3.1 Ansoff product-market matrix
Figure 5-2 Ansoff product-market matrix
In order to increase the product usage rate of existing customers, Halo Café has decided to increase the number of its branch around the national. Meanwhile, its market share will be increasing as well.
Halo Café is now trying to expand its business in new market by targeting in new market segment that have growth potential which is including music lover, students and teenagers, working peoples and festival celebration.
4.3.2 Marketing competitive strategy options
Halo Café can be considered as market leader among the competitors. There are five competitive strategy options for Halo Café to consider:
In order to stimulate the demand of customers, Halo Café attempts to increase the branch around the national and the customer satisfaction.
For the market share protection, Halo Café is going to use the marketing mix strategy, for example advertising and promotional tools, staff training, and increasing distribution.
There are a lot of interesting musical shows are provided by Halo Café with some of the famous team bands. Furthermore, Halo Café is able to provide a lower price than the competitors with the first class services for the customers.
In Malaysia, some of the places with high purchasing power have been neglected by the competitors such as Kuantan, Terenganu and Ipoh. Meanwhile, Halo Café is going to seize on this chance by building up its branch at those places.
To prevent the aggressive attack from the competitors, Halo Café has planned a new product innovation. In the field of category of food, Halo Café is now having a unique cuisine which is name as “Halo’s Cuisine”, for example traditional BBQ steak. And Halo Café has a lot of famous performers such as an Asian well known singer, Ah-Do.
5. Marketing mix strategies
5.1 Target market segments
The selected target market will be somewhat different from the others competitors. The range of target market will be separate into 4 major of focus groups which consist of the following:
In fact, Halo Café was a musical café in Malaysia, the place where gather much of talent’s singer. Due to the music industry trend to creative song, most of music lover like to gather and discuss, present their works of a writer. The sound system and music accessory such as guitar, keyboard must be complete in order to present a perfect performance to customer. Therefore, more music lover will be consuming in café.
More students and youngster in aged 15 to 21 use to like chase for idol. Due to the relationship with others music publishing company and ability of head office, Halo Café has the ability to organized more mini concert, competition, singer interchange with their song lover and other activity relation with idol in order to target the student and young people group. Thus, students and young teenagers will become the loyalty customer and introduce their friend for the place.
On the other hand, group gathering for young people was another focus group. As we found, most of young people in Malaysia likes to have supper and drink tea at night. Halo Café had provided this kind of place, some more it has a well atmosphere.
From working people, it can separate into 3 areas of people which are normal working people, drinker and organization gathering. Normal working people is those who like to have their dinner after worked and want to get relax after finished their busy day. Some more, the consuming expenses of working people was higher than young people.
Most of organizations use to have gathering and the annual dinner every month or every year. As organization opinion, there likes to celebrate their annual dinner at restaurant. However, this is a potential group that company must pay attention.
Furthermore, drinker was another sub-group in the part of working people. According to the finding, most of young working people likely to go recreation place at night, especially at the weekend. Halo Café provide a nice atmosphere, and also the healthy environment for those peoples.
Recent years, there have lots of people, especially young people and teenager in aged 15 to 34 are likely to celebrate the festival such as New Year, National Day and Christmas. Company can due to this reason in order to increase the brand loyalty for customer.
5.2 Positioning
Musical show has become the main feature of Halo Café to differentiate itself and its competitors. Furthermore, “Halo” can be defined as shell in Chinese which can be symbolize as happiness, release and healthy.
5.3 Product and services Strategies
Basically, Halo Café will provide its goods and services based on the new market segments and it’s trying to get rid of the traditional style café by providing some special events such as below:
5.4 Price
Price decisions must be coordinated with products and services design, distribution, and promotion and advertising decisions to form a consistent and effective marketing program.
At the view point of breakeven analysis, profit margin of the food must be 70% of its actual cost, and so 600% of the drink’s actual cost must be its profit margin as well. Similarly, there is 80% of the acholic drink’s cost must be its profit margin.
Furthermore, refer to the demand curve (figure 6-1), Halo Café is trying to decrease the price and increase the demand at the mean time in order to compete with others. As a market leader, Halo Café is able to provide a higher level of services with a lower price compare with its competitors.
Figure 5-1 Demand Curve
5.5 Promotion and Advertising
After carefully setting out the goals and objectives together with a brief guideline for how Halo Café will conduct its promotions, this part will discuss in in-depth the various tactics Halo Café will perform to reach the objectives.
In selecting the medium for advertisement purposes, Halo Café will select the most well known mediums amongst the targeted market in the whole of Malaysia. The best-selected advertising mediums selected are as the following:
5.6 Distribution
In order to reach the different market segments that Halo Cafe has targeted, it will focus the distribution strategy on the places which are having a high percentage of customer needs with high purchasing power and were being neglected by competitors. On the other words, there are more branches will be setting up at the East and North Malaysia. Furthermore, the headquarter of Halo Café will convey the useful information to its branches through the Just-In-Time system (JIT).
5.7 People
People are the main key to deliver the image among the customer’s and the service providers. So, as a market leader, customer’s feedback is necessary for Halo Café in improving its customer’s services. More briefly, this is how it provides the first class services based on the customer satisfaction and the concept that “customer will always come first”.
Moreover, staff training is required in order to get a higher customer satisfaction. Hence, Halo Café will place an emphasis on training its staff especially the efficiency of waiter/waitress. Besides, the staff with full-experience will be the first choice of the recruitment.
5.8 Process Management
Halo Café has delivered a consistent service quality to satisfy its customer’s needs and wants. Therefore, Halo Café should build up a good relationship between Headquarter and the others branches in order to get the consistency service and management.
Similarly, in order to improve its services and products by using the feedback from the customers, Halo Café is required to build up a good relationship with its customers.
5.9 Physical Assets
Once again, Halo Café is a high class musical café in Malaysia. It has its own famous team bands which provide the high quality of music for the customers with the excellent music facilities. Besides, a large amount of expenses will be spent in café designing such as the creative wallpaper. And the air-conditioner will be installed in order to improve the customer’s relaxation. Furthermore, not only the comfortable furniture will be used, but the branded dinner sets which represent the high status of Halo Café.
6. Budgets
6.1 Sales Forecast
The total sales growth of Halo Café is estimated at 15% annually. Halo Café expects that its sales forecast is based on the new market segments which are shown below:
Obviously, Halo Café has forecasted that there are about 35 % of the revenue comes from the working people. Hopefully, Halo Café can capture as much as possible of the sales from the students and teenagers who are likely to be considered as new generation.
6.2 Expenses budget
According to the table above, the expenses of Halo Café is roughly 3% of the revenue. It is suggested to remain the same in order to maximize the revenue.
7. Implementation, evaluation and control
7.1 Action plans
There are 10 peoples will be consist into the action team, and those of them are come from each department of Headquarter. The ability of each person are shown as below:
7.2 Evaluation and control mechanisms
To measure the success of the plan, customer feedback and report selling will be carried out the end of the plan. Information obtained will be used to make improvements in the future and also better serve the group of customers.
Halo Café will seek for the customer feedback through open-end questionnaire, closed-end questionnaire and interview from its customer.
In order to measure the plan, the report selling everyday will helps Halo Café to understand the customers need indirectly.
8. Contingency Plans
There are the issue that will cause some chances in Halo Café’s operation:
As a market leader, Halo Café is facing a lot of the challenges from different competitors. Hence, to prevent the competitors with similar offering, Halo Café is suggested to put more effort in researching and creating its own unique features, for example, Halo Cuisine.
No denying that, Halo Café has sufficient condition to expand its business in order to compete with others. But it has to ensure that the financial backup is strong enough to take place when economic recession. On the other words, Halo Café will implement a cost cuts instead of expanding its business such as the salary adjusting of the staff.
