Group 5 (B01E)

Chan Kin Chu (Matt) 13615542S

Choi Winki 13627878S
Kusnaidi Deny 12286283S
Lo Cheuk Yin (Cherry) 13607204S
Tong Wing Ni (Winnie) 13625443S
Wa Tin Yan 13017369S
Ladure
SPD4291 Global Marketing
Contents
Macro-Environmental
Analysis
Competitive Analysis
Marketing Objectives
& STP
Market Entry Strategy
Marketing Mix
Strategies
Marketing Environment Analysis
Economic Environment and Financial Environment
Winki
Economic & Financial Environment
GDP: 56.9 trillion Yuan in 2013, reached
7.7% growth
GNI per capital:29547 Yuan
Economic
Statistics
Chinese spent1020 billion USD on luxury
products in 2013
contribute to 47% of sales revenue on
luxury market
Luxury
spending
The dine-out expenditure of first-tier cities
is higher than second-tier cities for 35%
First-tier cities mainly refers to
Shenzhen, Beijing, Guangzhou,
Shanghai
Dine Out
Expenditure
Economic & Financial Environment


Source: Map of special economic zones (BBC)
Special Economic Zones:
1. Pudong District, Shanghai
2. Xiamen, Fujian
3. Shantou, Guangdong
4. Shenzhen, Guangdong
5. Zhuhai, Guangdong
6. Hainan
Economic & Financial Environment
Closer Economic Partnership Agreement (CEPA):
Between China & HK
Hong Kong suppliers enjoy preferential treatment when setting up
business in various service in the Mainland

Less restriction on :
operation model (eg. allowing wholly-owned operations)
registered capital requirements
geographical location and business scope

Association of Southeast Asian Nations (ASEAN)
ASEAN Free Trade Area ()


Free Trade Area
Economic & Financial Environment
Chinas economic freedom score is 52.5, making its
economy the 137th freest in the 2014 Index
-> tight control of the financial system.
Source: Wall Street Journal
2014 Index of Economic Freedom
Increase
investment
freedom
Cultural Environment
Admire Foreign Culture
Top 10 brands are foreign brands in Chinese
customers mind (world Brand Lab)
China citizens lack of confidence in local
enterprise
Popular Country to Chinese
France is the most popular country to Chinese
people
35 % respondents want to go to Paris and
Shopping in Lafayette department store (Travelzoo)
Luxuries Consumption
Consume luxuries for business gift
Show-off their social status, power and taste
Anti-corruption in China: dilute luxury brand
LOGO features& low-key luxuries

Cultural Environment
Guan-Xi :necessary for doing business

Luxuries as a business gift
First-tier cities : 28%
Second-tier cities: 36 %
Categories: High-end brands clothing, leatherware , wallet etc

Guan-Xi:
-Building up network
-Fit to Chinese Traditional
business model
-operate business more easily
Source: Insead
Cultural Environment
Hofstede Index of China
Source: The Hofstede Centre
High Power Distance:
Accept unequal power status
& wealth
-> Obsession hierarchy
-> respect to authority

Masculinity:
success/result/
achievement is important
-> Mian-Zi(
-> a person reputations and
social standing rest on
concept of saving face




Gift Giving Culture
Gift giving used to be part of Chinese business protocol
& tool for building relationship
-> related to Guan-Xi

Gift for Chinese New Year, Mid Autumn Festival, birthday etc

Luxury gifts: more popular between couples


Cultural Environment
Color Preference
Cultural Environment
Colors have variety of meanings in Chinese Culture

Red: Considered as lucky color in China
One of the most save color Choice

Gold, Silver and Pink : suitable color for packaging

White, Blue , Black should be avoided (negative meaning)
-dead, dirty, sorrow


Marketing Environment Analysis
Politic Environment and Legal Environment
MATT
Political Environment
Under WTO
regulation and
rules
FDI, Joint
Venture,
Exporting ,
Franchising
Provide non-
discriminatory
treatment
Price controls
will not be
used fair
competition
environment
Political Environment
Political stability is low

The likelihood - estabilized or overthrown
by unconstitutional or violent means
Ranked in 146 among 192 countries





Political Environment
political risk (dynamic) is high
Political Environment
Legal Environment
Corporation Income Tax unified for
domestically funded and foreign
investment at 25 %

In HK, Corporation Profit Tax is 16.5
Legal Environment
Individual income tax-
Progressive Tax Rate and Table of Quick Deductions Applicable
to Wages and Salaries
Level
Net Taxable Income per Month
(assessable income net of deductions and
allowances)
Rate(%)
1 RMB 1,500 or less 3
2 over RMB 1,500 to RMB 4,500 10
3 over RMB 4,500 to RMB 9,000 20
4 over RMB 9,000 to RMB 35,000 25
5 over RMB 35,000 to RMB 55,000 30
6 over RMB 55,000 to RMB 80,000 35
7 over RMB 80,000 45
Compared with HK,
Only 2% to 17%
of net chargeable
incomec
Repatriating Profits and Dividends
Timing of Repatriation
Profit repatriation can only be conducted once a
year after the annual audit has been completed
Remittance Requirements
Institutions in China making outbound payments
the value of US$50,000 are required to conduct
record filing with the in-charge of the State Tax
Bureau (STB).
Conclusion of environment
analysis in China
High in political risk and stability
High in tax rate
Economic freedom is low, business
activities may be restricted
Large potential financial return
Competitive Analysis
Opportunities:
- Foreign luxury brand is popular in China
-Similar Food Consumption patterns with HK & Taiwan
-Purchasing power increase enjoy better food quality

Threats:
- Policies to save catering expenses
- Instable of RMB currency
- Leak of trade secret
- Food Safety issues
Catering
The potential business
opportunities
Laduree Macaroon



Agnes b.cafe
Marketing Objectives
Short-term and Long-term
DENY
CEO of Holder Group
David Holders
Founder
Louis Ernest Ladure
Who?
Popularity: 152 years
Recognise as one of
the best known
makers of macaroons
in the world
Usage
15,000 sold every day
How?
Has been established
since 1862
When?
Headquarters:
Marcq-en-Barul, France
Present: 69 Branches
France: 18
Japan: 7
Switzerland: 7
Hong Kong: 3
Where?
A French luxury bakery
and sweets maker house
What?
Company Background
Marketing Objectives
Short-Term: 1 year
Increase brand awareness up to 70%
Increase sales/revenue (capturing up
to 10% of the market share)
Expands into Special Economic
Zones (SEZ) in China (Guang Zhou,
Beijing, Xiamen, Shantou, Shen Zhen,
Zhuhai)
Building brand loyalty project to
have at least 30% regular customers
Lead industry in brand alignment and
consistency (e.g. CSR activity
positive corporate citizen)
Ethical standards for marketing
communications will be put in place
(e.g. language, packaging)
Marketing Objectives
Contd

Acquire a title of China Michelin-
starred restaurants on each branches
Long-Term: 3 5 years
Reach 25% of market share in
China
Become top five in the luxury
bakery and sweets maker industry
Competitive Analysis
Weaknesses:
- Limited product focus
(Cannot diversify)
(Macaron & Mille Feuille au Rhum)
-Food is culturally sensitive
(different dietary preference)

Strengths:
-Strong French Brand
(a famous brand in French)
-Clear positioning
(High-end product/ luxury package)
-First macaroon developer

STP
Segmentation, Targeting, and Positioning
DENY
Segmentation: Demographic
Population size: most populous country in
entire world (1,350 M) = 19.3% throughout the
world
Ethnicity
Composed of 56 ethnic groups
Largest: the Zhuang = 16 M
Average: the Hui = 10 M
Smallest: the Lhoba = 3,000
Language: Mandarin or Putonghua
Age: Range 21 65 years old Global Elite:
Baby boomer, generation X, as well as Y
Income: Middle Higher Upper
Education: Post-Tertiary Level
Occupation: Wide-ranging (business
especially white-collar workers
professional, managerial, or
administrative work), Tourism tourist
Segmentation: Demographic
Contd
Segmentation: Psychographic
Attitudes:
Pluralisation of consumption seeks for variety
of ethnic food (i.e. new tastes, excitement, and
sensations in life)
Adaptive and European-culture lover, stressful
negate from dailys routine

Segmentation: Psychographic
Contd
VALS Framework
Targeting
Women seduced by:
Feminine pleasures
Cakes and Sweets
Cute and beautiful atmosphere
Making gifts
Events organisation
Idealistic woman
Trendy Chinese
Sophisticated Gourmet
Affluent Materialists
Status-conscious (use
conspicuous consumption to
communicate their success to
others)
Age : 21 40 (Gen. X & Y)
Income : middle high upper
Businessman:
Relaxation site
Stressful
Chit-chat or Formal discussion
Negates daily routine
Affluent Materialists
Status-conscious (use conspicuous
consumption to communicate their
success to others)
Guan Xi
Positioning
Perceptual Map
High Quality
High Price
Low Quality
Low Price
Positioning
Contd
Foreign Consumer
Culture Positioning
(FCCP)
Brand Function
(i.e. French Gourmet
Delicacies)
Descriptive Modifier
(i.e. Highest-quality,
exclusive, and elegance)
Emotional Modifier
(i.e. status providing)
Market Entry Strategy
Joint Venture
WINNIE
Joint Venture
Cooperate with a successful Catering Company
based in Hong Kong & China

Selected Company:
Expert of catering industry
Ranked in top two in catering
industry market share
Pioneer of Joint Venture in China
Experienced CEPA system
Starbucks is one of joint venture corporation
Joint Venture
Experienced CEPA system:

Specialize in exploring China F&B Market
by promoting Hong Kong bakery products

Closer relationship with Mainland
enterprise in F&B trading

Accelerate & integrated its F&B business
Reduce the risks

Joint Venture

Maxims has a wide network in catering
industry


Maybe the only way to remove barriers +
difficulties to enter China market

More efficient than licensing Achieve
Synergy
1 1 3
Joint Venture (Advantages)
More familiar with the
environment e.g.
Political risk, legal
liability & taxation
Localized
Partners
Provide an
opportunity to learn
the strengths
Collaboration
Contribute the
catering Know-hows
in China
Expertise
Communication:
Adaptation of language,
culture, Dietary preference

Work together
Supply chain: Logistic,
Distribution
Share of Knowledge + Techniques
Reduce Human error
Share of expertise
e.g. Chef
Marketing Mix Strategies
Product, Price, Place, and Promotion
Adaptation of 4P in Laduree
Product
Place
Price
Promotion
Adaptation
Product
Marketing Mix Strategies
Cherry
Product

Unchanged brand name and
brand logo
Gift giving & luxury products
Admire foreign culture
Foreign / imported products are
seem to be luxury
Branding
Taste - sugar light
Match Chinese taste
Black sesame
Pine nuts and red bean paste
()
Zaoni walnuts()
Edible bird's nests
Product
itself
Product

Experiential Packaging
Gift pack
Red color of package
Color: red
Symbolizes good fortune and
joy
Design package for different
festival
Packaging
Language
Simplified Chinese
Place labelling at the back of
the box
specified ingredients, flavors
Labelling
Product


Chinese people prefer classy
touch
Symbolic power
Edible gold leaf ()
New Year-themed macaron
Macaron moon cake



Aesthetics
Price
Marketing Mix Strategies
Yandy
Price
Polycentric Pricing Policy:

Market Skimming Pricing
A premium price (Price Quality Inference :
using high price to infer a high quality)
Positioning for luxury products


Place
Marketing Mix Strategies
Cherry
Place
Commercial hub
Higher income
Strategy
Direct involvement
alternative
Focus on flagship stores
Showcase Macaron
Serve customers directly

First-tier cities
Beijing
Shanghai
Shenzhen
Zhuhai
Shantou
Xiamen
Hainan
Business transaction
Commercial hub
Marketing Communication
Yandy
Marketing Communication
Pattern Advertising:
Standardize brand elements
Use pan-regional elements in China market,
e.g TV commercials will use Voice-overs
Marketing Communication
Contd
Communication Channels:
(1)Newspaper : Newspaper (China Daily:
business oriented ,well educated people)

Marketing Communication
Contd

(2) Magazines: selling luxury magazines
Marketing Communication
Contd

(3)Online marketing:
Develop a Chinese Official website &



Weibo: invite blogger (opinion leaders)to have a trail
and write the comment of our products.
Reference
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Appendixes