Sparkling ICE by C100 Team 4: Daniel Dorson, Kim Foote, Kelsey Kitchen, Rachel Mendez, Mandy Schiff, Kacey Silverman
Talking Rain s Sparkling ICE should partner with Nongfu Spring s C100 in Shenzhen, China Major issues of unsanitary water and air pollution Fruit juice and bottle water growing faster than soda Launch pear flavored sparkling water Mineral water holds 42% market share in China 73% of consumers purchase healthy beverages for having a well-known brand Source: http://www.euromonitor.com/bottled-water-in-china/report 2
Market Assessment Market Entry Strategy Marketing Plan 3
China provides favorable market assessment criterion for Sparkling ICE Product Suitability Target Markets Industry Market Potential Business Partner Company Sales Potential Introduce pear flavored beverage to meet needs of new market Shenzhen, China enables targeting urban growth clusters Favorable emerging market potential index of 52.57 Value-adding activities performed by Nongfu Spring Co. Future growth expected from Global Strategic Partnership Source: Global Market Opportunity Assessment, S. Tamer Cavusgil/Gary Knight/John Risenberger 4
China is an appropriate country of choice Doubled global market share Consumption grew 14% in 2012 China s bottled water market Projected increase 73% by 2017 Projected sales of $16B by 2017 Source: Bottled Water Market Quickly Turning Chinese, Forbes.com 5
Our offering better serves consumers needs and is suitable for upcoming beverage trends Sell well in domestic market - Sparkling ICE sold $148M in 2012 and now accounts for 95% of sales Cater to universal need for clean drinking water in China Address need not well served in foreign markets - toxic organic pollutants have been discovered in the Yangtze River Address new or emergent need abroad - Chinese consumers become aware of the health benefits of drinking water Source: Global Market Opportunity Assessment, S. Tamer Cavusgil/Gary Knight/John Risenberger 6
A Global Strategic Partnership offers a favorable mix of investment, commitment, and risk Risks Benefits Source: Global Market Entry Strategies, Warren J. Keegan/Mark Green 7
Marketing plan to guide decisions regarding standardization and adaptation Product Adapt flavor Export American water Price Localized flexible cost-plus pricing 10-30% premium Place Supermarkets Hypermarkets Promotion Local TV/print ads Show transparency/ build trust Source: Marketing in the Global Firm, S. Tamer Cavusgil/Gary Knight/John Risenberger 8
Potential risks for expansion are minimal and easily mitigated with marketing alternatives Risk Scale Mitigation Initial entry with one flavor Rejection from Chinese consumers Lack of intellectual property rights Sparkling ICE cannibalizes C100 Establish market share quickly and launch new flavors based on in-depth consumer research Utilize Nongfu s market knowledge to cater to consumers preferences Delay competitors by conveying American image to inspire trust and differentiate product Exploit GSP through continual transfer of resources horizontally Level of Impact Relative Probability 9
Questions? Appendix A: Implementation strategy/timeline Appendix B: EMPI Index Appendix C: McKinsey s Industry Growth Cycle Appendix D: Task Five Business Partner Criteria Appendix E: Shenzhen, China; initial entry city Appendix F: Additional benefits utilizing a Global Strategic Partnership Appendix G: Route to market Appendix H: Global Marketing Strategy Appendix I: Secure support from key stakeholders Appendix J: Hofstede s Cultural Dimensions Team 4: Daniel Dorson, Kim Foote, Kelsey Kitchen, Rachel Mendez, Mandy Schiff, Kacey Silverman 10
Appendix A: Implementation strategy/timeline Establish Negotiations Back Product design, Focus groups Export using C100 distribution to enter stores Establish relevant market share in entry city Expand to other cities in China; Produce more flavors 11
Appendix B: EMPI Index Back Country Market Potential Market Size 20% Market Growth 10% Market Intensity 12% Market Consumption 18% China 100 100 1 70 India 37 74 28 78 Infrastructure 15% Economic Freedom 5% Market Reception 15% Risk 5% Total 39 8 4 54 52.27 22 52 3 42 40.65 Source: http://globaledge.msu.edu/mpi 12
Appendix C: McKinsey s Industry Growth Cycle Chill-out Zone Hot Zone Warm-up Zone Source http://www.mckinsey.com/features/30_trillion_decathlon Back 13
Appendix D: Task 5 Business Partner Criteria Specific industry expertise C100 provides well-known and favorable local brand presence Access to local distribution channels Appropriate facilities and infrastructure Financial strength Revenue = $1.6 Billion USD Technical expertise Utilizes SAP to improve operations Quality of staff 8,000 sales representatives serve more than 1 Million customers gratification for thirsty consumers Source: http://www.smigroup.it/smi/repository_new/doc/nongfu_uk.pdf Back 14
Appendix E: Shenzhen, China; initial entry city Benefits for Exporting Special Economic Zone World s 4 th largest port Demographics 10.47 million people City of migrants from all over China Average age < 30 Primarily speak Mandarin, then Cantonese, Hakka Highest Per Capita GDP among Chinese cities Back Source: http://www.china-briefing.com/news/2010/11/11/chinas-wealthiest-cities-2-the-demographics.html http://understand-china.com/province/shenzhen/ 15
Appendix F: Additional benefits utilizing a Global Strategic Partnership Develop a joint long-term strategy pursuing differentiation through healthy water from USA with popular Chinese flavored water brand Reciprocal relationship; Sparkling ICE shares beverage and C100 shares established local presence, distribution, and advertising Back Continual transfer of resources horizontally Participants retain their national and ideological identities Source: Global Market Entry Strategies, Warren J. Keegan/Mark Green 16
Appendix G: Route to market Back Test Market Retailers known for imports in Shenzhen Expansion Use Nongfu established distribution channels Source: http://shenzhenshopper.com/531-grocery-shopping-in-shenzhen-where-to-buy-imported-foods.html 17
Appendix H: Global Marketing Strategy Back Position in the Market C100 Sparkling Pear is an all natural, healthy alternative to carbonated soda Pears provide superior health benefits and sparkling water is new to market Well-known United States brands resonates and inspires trust Imported to insure water is reliable and of supreme quality Target Customer Segments Nongfu Spring s current demographic; young intellectuals with a high level of education and are health conscious Affluent white collar workers willing to pay a modest premium for nutritious, safe, and high quality foods Source: http://blog.euromonitor.com/2014/03/chinas-functional-beverage-market-thrives-as-brands-zero-in-on-key-demographics.html 18
Appendix I: Secure support from key stakeholders Gov. Relationship Regulations, tariffs Back Media Image Advertising Society Brand reputation Buyer behavior 19
Appendix J: Hofstede s Cultural Dimensions 80 87 66 20 30 Power Distance Individualism Masculinity Uncertainity Avoidance Long-term Orientation Source: http://geert-hofstede.com/china.html Back 20