1.0 Executive summary
This assignment was commissioned to select a local Malaysian company in any industry which is operating in a host country. The company that was selected is Oldtown white Coffee which is operating in China. By using the Deeplist analysis, porter 5 forces and Hofstede cultural, this theoretical frameworks allows to analyze the business environment in China. The marketing strategies that Oldtown used in China was measured by using the 4p’s, segmentation and consumer behaviour and degree of adaptation. Recommendation was given on the ways that Oldtown could improve in terms of their marketing strategies in China.
Beginning with the history of Oldtown white Coffee, it started in the year 1999. Oldtown aim is to deliver high quality of white coffee to the Malaysian household as well as the food service industry. Blend 3 in 1 instant coffee is formulated by Mr. Goh Ching Mun the co-founders and Mr. Tan Say Yap the executive directors. The growth of the Oldtown were helped by the co-founders with the provision of Mr. Lee Siew Heng who is holding the position of Managing director of the company. The role that he was responsible was implementing the company vision, development and strategy. Oldtown currently exports beverages to 17 markets globally. In this assignment, I had choose China as my host country. I will be doing research on analyzing the global marketing strategies that Oldtown adopted in China.
Instability in the economic and trade policy challenges China, where it is the second world’s largest economy as well fastest growing economies globally. When international companies enters into China, they must study the economic stability and prepare to face numerous risk because of the changes in monetary policies, the trade policies, fiscal policies and etc.
Yuan was more like a floating currency in 2017 which was unstable between 6 to 7 Yuan against 1 USD. Therefore, changes in the Yuan could give an impact to the profitability of the international businesses. Not only that the labor cost in China as also increased gradually the past five years plus the minimum wage level as also increased by the government. This will actually give an impact to the cost of operating in China which will affects local as well international companies who is operating in China.
As stated above, the average wages has increases in past years which leads to customer spending power increases. People in China looks for status of symbol by owning latest smartphones, designer clothing as well luxury cars in demonstrating their success. Increased in consumer spending is a great opportunity for domestic and also foreign companies.
The development of the internet environment as well the promotion in China has brought a huge opportunities into the e-commerce. Numerous e-commerce platforms has increased sharply lately this is because consumers in china prefers online shopping rather then going to shopping malls to get the products or services.
Due to the differences in culture, Oldtown follows different standard technique marketing strategies in Malaysia but in China, it has adapted to the global localization which uses the polycentric orientation influenced by the local culture and also market conditions in gaining Chinese consumers confidence and trust. The product development is geared up to adapt to the products attributes in suiting up the local market conditions (Harold Chee and Rod Harris, 1998). For example, the product packaging of Oldtown is written in Chinese language in China in order to allow consumer in accepting the product.
Oldtown also had adapted to the standardization of certain degree in which they offer Nasi Lemak Special, Wonton Soup, Toast and also Kaya and Peanut Toast in Malaysia and also China. Moreover, the interior design of the outlets in China is same as in Malaysia (Appendix 2).
For product strategy, Oldtown in China has adapted to a certain level of degree in which China is recognised as a tea traditional country, so they have come up with a white milk tea product which will attract more consumers because consumers in China prefers tea more then coffee and it is expect to increases more in the coming years (Statista, 2018). Moreover, Oldtown had launched the mocha flavour in China in 2017 in aiming to target the young consumers and individuals that do not drinks coffee (minime insights, 2018). This is because the changes of the lifestyle of young consumers in China would actually upsurge their demand for coffees. Moreover, the branding that Oldtown use in China is…..
Oldtown have been present since 2014 in China’s leading platforms and reported to been doing very well on the key supermarket chains and also online retailers, for instance, jd.com and t-mall. (Oldtown AR, 2017.) They are also presently supported well at almost 100 online major platforms in China. A website which uses the native language might increase the consumers’ confidence in purchasing their products. This builds a connection between Oldtown and the consumers in China.
In terms of pricing strategy, Oldtown uses polycentric pricing for their products. Due to the differences in culture and demand among the customers, the price is set in order to suit the local conditions (Oldtown annual report, 2017). Oldtown also uses online pricing strategy occurs in a situation where certain wholesalers or retailers who purchases products from The Oldtown White Coffee in a large quantity and able get trade and also quantity discount. For an instance, T-mall uses bundle pricing strategy in selling the Oldtown products where they sell two or three products together and also with a free mug for every purchases.
For promotional strategy, Oldtown used “word of mouth” marketing strategy in promoting their product in China. They recently had a contest where customers could win prizes such as free two tickets to Malaysia and free one year Oldtown white coffee. In order to win those prizes, they have to take pictures and upload it on any social media and tag a friend and include hashtag of #ILOVEOLDTOWN and set the post as public. The strategy used by Oldtown was good as social media networking is an influential marketing tool in building brand awareness and also it maximizes exposure. Not only that, it also bring product demonstration in which allowing consumers to evaluate the product.
There are few gaps that Oldtown is facing in gaining their popularity and brand awareness from the societies. First is social media. Wechat is the number one social media platform at China with almost 768 million users daily. Oldtown doesn’t use that strategy as it could bring various benefits for the company. Oldtown is also not operating at Shanghai and Beijing currently. Those are the top two cities with high population as well high income level in China. Thirdly is Oldtown is currently using franchising and exporting as their expansion strategies in China. It shows that Oldtown doesn’t alliance with any local company in China. This results lack of certain insider knowledge as well expertise in China.