Laduree PowerPoint Report_final_update (2)

Group 5 (B01E)Chan Kin Chu (Matt) 13615542SChoi Winki 13627878SKusnaidi Deny 12286283SLo Cheuk Yin (Cherry) 13607204STong Wing Ni (Winnie) 13625443SWa Tin Yan 13017369S

Ladurée SPD4291 Global Marketing

Contents

Macro-Environmental Analysis

Competitive Analysis

Marketing Objectives & STP

Market Entry Strategy

Marketing Mix Strategies

Marketing Environment AnalysisEconomic 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 ( 東盟自由貿易區 )

Free Trade Area

Economic & Financial Environment

China’s 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

customer’s 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 （商務馈赠）• First-tier cities : 28%• Second-tier cities: 36 %Categories: High-end brand’s clothing, leatherware , wallet etc

Guan-Xi:-Building up network-Fit to Chinese Traditional business model -operate business more easily

Source: Insead “ 中國生意經： 關係不可少”

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(面子）-> 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 AnalysisPolitic 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 ObjectivesShort-term and Long-term

DENY

CEO of Holder Group

David Holder’s

FounderLouis Ernest Ladurée

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-Barœul, 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 Cont’d

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

STPSegmentation, 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 Cont’d

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 daily’s routine

Segmentation: Psychographic Cont’d

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 Cont’d

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 StrategyJoint 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

Maxim’s 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 StrategiesProduct, Price, Place, and Promotion

Adaptation of 4P in Laduree

•Product•Place•Price•Promotion

Adaptation

ProductMarketing 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 ( 豆沙松子 ) Zaoni walnuts( 棗泥核桃 ) 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 ( 食用金箔 )

•New Year-themed macaron

•Macaron moon cake

Aesthetics

PriceMarketing Mix Strategies

Yandy

Price

Polycentric Pricing Policy:

Market Skimming PricingA premium price (Price Quality Inference :

using high price to infer a high quality)Positioning for luxury products

PlaceMarketing 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 Cont’d

Communication Channels: (1)Newspaper : Newspaper (China Daily: business oriented ,well educated people)

Marketing Communication Cont’d

(2) Magazines: selling luxury magazines

Marketing Communication Cont’d

(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

Ta Kung Pao (2014), The Average Income of cities residents in 2013 is 29547RMB. Available from: http://http://china.takungpao.com/beijing/2014-01/2195331.html [Accessed: April 3, 2014].

Bbc News (2006), Quick guide: China's economic reform . Available from: http://news.bbc.co.uk/2/hi/asia-pacific/5237748.stm [Accessed: April 1, 2014].

Cpc People.com (2010), China adjust policy in order to attract FDI. Available from: http://theory.people.com.cn/BIG5/12465792.html [Accessed: April 3, 2014].

The Global Economy.com (2011), political Stability index. 2011. Available from: http://www.theglobaleconomy.com/indicator_static_graph.php?indicatorId=wb_political_stability&multiplier=1&iround=&graphTitle=&top_ten=all&top_ten_sel=all®ions=1w&year=2010 [Accessed: April 2, 2014].

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Inland Revenue Department (2013), Profits Tax Rate . Available from: http://www.ird.gov.hk/eng/tax/bus_pft.htm#a10 [Accessed: April 4, 2014].

Conpak (2014), Individual Income Tax. Available from: http://www.conpak.com/Individual-Income-Tax.html [Accessed: April 6, 2014].

Reference

Udn (2012), knowing the difference between simple and tradition Chinese. Available from: http://paper.udn.com/udnpaper/PID0005/210793/web/ [Accessed: April 2, 2014].

Honey and Soy (2011), Macaroons for Chinese New Year! Black Sesame Macaroons. Available from: http://www.honeyandsoy.com/macarons-for-chinese-new-year-black-sesame-macarons/ [Accessed: April 3, 2014].

Xwcb.eastday.com (2006), Western restaurant match Chinese's taste by localizing.. Available from: http://xwcb.eastday.com/eastday/node13/node126/node3646/userobj

Epochhk.com (2013), Featured Moon Cake- Macaroon moon cake. Available from: http://www.epochtimes.com.hk/b5/13/9/17/184407.htm [Accessed: April 3, 2014].ect1ai52921.html [Accessed: April 2, 2014].

Trade and Industry Department (2012), Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA). Available from: http://www.tid.gov.hk/english/cepa/tradeservices/trade_services.html [Accessed: April 6, 2014].

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Iceo.com.cn (2013), Doing Business In China,"Face" is necessary. Available from: http://www.iceo.com.cn/renwu/46/2013/0227/264350.shtml [Accessed: April 5, 2014].

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Reference

World Luxury Association (2013), 2014: dilute luxury brand LOGO features. Available from: http://www.wla.org.cn/ [Accessed: April 2, 2014].

China Briefing (2013), Repatriating Profits and Dividends from China. Available from: http://www.china-briefing.com/news/2013/10/11/repatriating-profits-and-dividends-from-china.html [Accessed: April 7, 2014].

National Bureau of Statistics of People's Republic of China (2014), China's GDP in 2013. Available from: http://www.stats.gov.cn/tjsj/zxfb/201401/t20140121_502731.html [Accessed: April 2, 2014].

Wen Wei Po (2014), a survey shows that Chinese purchase half of luxury product in the world. . Available from: http://news.wenweipo.com/2014/02/28/IN1402280006.htm [Accessed: April 1, 2014].

Oriental Daily (2014), Chinese purchase nearly half of luxury products. Available from: http://www.orientaldaily.com.my/index.php?option=com_k2&view=item&id=101732:&Itemid=197 [Accessed: April 5, 2014].

Appendixes