老曾记 市场研究报告.doc

Marketing Project十一月 42011I wrote this, but feel free to edit it.Prepared by Tee Jia Rong Cho SungHye Anandraj YunJiao YanJunExecutive SummaryStarted in 1956 as a small stall, Old Chang Kee has transformed itself into a successful local brand that is best known for its curry puffs and other fried- finger food. Its growth in the industry can certainly be attributed to its various successful marketing strategies through the years. Given the dynamic nature of the F&B industry, Old Chang Kee has to constantly adapt to the changing environment to remain competitive. With the increase in competition, Old Chang Kee has to review its marketing policies and focus on its core competencies to maintain its brand image to be synonymous with tradition.This report seeks to highlight and analyze the current marketing strategy and mixes that Old Chang Kee is employing based on the companys intended customer analysis and segmentation. This will be done using the PESTEL framework, Porters Five Forces, and SWOT analysis. In addition, the report will identify areas that Old Chang Kee can improve on and provide recommendations with respect to its marketing objectives.The research data was gathered from online annual reports, websites and an interview with the CEO of Old Chang Kee, Mr William Lim. Using a macro-environmental analysis, it has been identified that Old Change Kee has to constantly introduce new products, while maintaining low prices to remain competitive. In keeping its prices low, it has to integrate IT into its production system as well as to diversify its sources of raw materials. This is further supported by Porters Five Forces where the intensity of rivalry and the availability of substitute products have been identified to be the main concerns for Old Chang Kee. Due to its low marginal profit, providing price promotions may not be feasible for Old Chang Kee. Therefore, it is recommended that moving forward Old Chang Kee focus on its Advertising and Public Relations to reach out further to consumers and imprint their brand name into the masses. This can be done via conducting entrepreneurial talks in schools as well as creating promotion cards to engage public participation while creating the opportunity for them to try a whole range of products. 2. Company descriptionOld Chang Kee is an established company in Singapore F&B industry, which specializes in finger foodhas been transformed from a small coffee shop stall to Singapores leading brand of curry puffs and other hot finger food in 30 years from 1956. The establishment of factory in Woodlands signified OCKs belief that constant upgrading of technology and modernization are the keys to standardize the work flow and to ensure stringent quality control of OCKs food products. In order to differentiate from its competitors in the fast-food industry, OCK has come up with distinctive sub-brand names for all its products. It is related to branding strategy, therefore should be under product strategy. Besides, OCK has been persistent in preserving traditional Singaporean flavor, yet intelligently adjustable in its marketing strategies in response to the keep-changing consumer trends. Moreover, the fact that OCK has achieved “Halal” certification has enabled the company to reach out to the Muslim community, and many of OCKs finger snacks originate from different ethnic cultures as well. This is essential for OCKs success in a multi-cultural and multi-religious society like Singapore. As a whole, these approaches have enabled OCK to be recognized as a major household brand with a distinctive flavor and heritage in modern Singapore society.Currently Old Chang Kee is available in 47 retail outlets locally. In order to match up with the shifting consumer trends, it has also diversified and extended its product range to include other snacks and desserts such as crab claws, sotong fritters and pineapples pies We can talk about “products and services offered” in more details here. If im not wrong, we dont have a “products and services offered ” section in the report, is it?. This marketing plan Change to: in this report, we are analyze its marketing plan/strategy that outline howhot savouriesshall outline how Old Chang Kee a small stall - was transformed into Singapores leading brand of curry puffs and other hot savouries.3. Organization structure of Old Chang KeeThe Board of Directors consists of an executive chairman and a Chief Executive officer and three independent directors . The executive chairman is mainly involved in the overall management and business strategies setting of the company. Chief Executive Officer, on the other hand, is responsible for product and market development and supervising sales development strategies . Old Chang Kee Investor Relation Report 2010 Independent directors, who do not have past or ongoing business relationships with Old Chang Kee, provides alternative channels through which investors communicate with managements when normal channels of the Executive Chairman or Chief Executive officer are ineffective. They also serve as consultants to the management in areas such as accounting & finance, business & management, corporate governance and law Old Chang Kee Investor Relation Report 2010Under the Executive Chairman and the Chief Executive Officer there are five major managers whose responsibilities are listed in the organizational chart above. 4.Recent Performance- financial analysisOld Chang Kee has a steady performance in terms of market coverage and sales growth. As at 31 December 2010, the Group operated a total of 78 outlets in Singapore as compared to 76 outlets as at 31 December 2009 Old Chang Kee Annual Report 2010. Sales Revenue has an average 7% increase since 2008.However, gross profit margin declined from 61.3% of revenue in 2009 to 59.9% in 2010, which can be attributed to a higher raw material costs and higher depreciation expenses on plant and equipment. Overall, the profit margin is roughly constant since 2006, meaning the companys profitability has either declined or grown over the last 5 years. Moreover, there is a general decreasing trend of the companys sales growth figure. The reason could be that the domestic market, which contributed a great percentage of overall sales, is fairly saturated. 20102009200820072006Sales growth8.0%6.5%19.5%20.0%21.6%Profit margin59.9%61.3%59.6% 58.6% 59.1%Besides, net profit decreases from $4,298,000 in 2009 to $2,851,000 in 2010. The major reason for this is the reduction in governmental grants in 2010. For instance, the company received a grant of about $827,000 under the Jobs Credit Scheme. The grant amount was reduced to about $173,000 in 2010. In terms of financial health of the company, Old Chang Kee has a good current ratio, which increases from 1.8 in 2008 to 2.3 in 2010. The net working capital also improves in 2010. This indicates that the company is liquid and under little pressure of repaying short-term debt. In terms of financial health of the company, Old Chang Kee has a good current ratio, which increases from 1.8 in 2008 to 2.3 in 2010. The net working capital also improves in 2010. This indicates that the company is liquid and under little pressure of repaying short-term debt.5.Macro-environmental analysisTo analyze the macro-environment of Old Chang Kee, we will adopt a PESTEL framework, i.e. from the six perspectives, namely political, economic, social, technological, environmental and legal, so as to gain a holistic understanding of external factors that influence the business of Old Chang Kee.Social factors: There are a few social factors working in Old Chang Kees favor. Its take-away, finger-food-fashion products fit well into Singaporeans fast-pace lifestyle. Its signature foodcurry puffis viewed as a representation of Singaporean flavor and attracts a large number of tourists.However, there is growing health concern among Singaporeans. Some individuals may reject fried food which to be unhealthy. A drop in demand for Old Chang Kees food product might be potentially resulted if such concerns are not addressed.Economic factors: Given its low price range, Old Chang Kees food product holds a very low percentage of consumers overall discretionary income. Hence, demand inelasticity with respect to disposable income renders Old Chang Kee relatively recession-proof and this is demonstrated by its steady sales growth since 2007. However, it could play to Old Chang Kee disadvantage in the event where consumers income increases, it might not result in a proportionate increase in demand for its food product.Therefore, Old Chang Kee must enhance its brand image and introduce new products to cater to peoples changing preference and taste. F&B industry is also remarkably susceptible to fluctuation in raw material price. For example, recent flood in Thailand causes a surge in prices of raw materials that could in turn affect production cost of Old Chang Kee.Exchange rate also has a considerable effect since raw materials and ingredients are mostly imported from overseas. For instance, depreciation of Spore dollar would mean more expensive imported ingredients and raw materials in terms of S$.Technological factorsOld Chang Kee rides the tide of widespread of E-Commerce, increasing its product availability through online-order. Besides, the ongoing IT project to incorporate IT into its operation management and waste management system helps to facilitate the market expansion strategy by providing up-to-date market indicators. Due to the differences in demographics specific taste and preferences, Old Chang Kee conduct R&D locally, and at the same time, outsources lab tests to foreign labs in order to reduce cost.Political and Legal: Old Chang Kee benefited from governmental grants in forms of Job Credit Scheme .sg/budget_2009/key_initiatives/jobs.html in 2009. However, this is merely a short-term boost policy and grants such as these fluctuate. Old Chang Kee suffered from a decrease of net profit during year 2009 and 2010 partially due to the decrease in grants. Chairman statement, Old Chang Kee Annual Report 2010To respond to the rising public concern on food safety and quality, Old Chang Kees obtained HACCP certification for the manufacturing of Curry puff and implemented a quality assurance program OCK official website conduct R&D locally, and at the same time, outsources lab tests to foreign labs in order to reduce cost. Environmental:As mentioned above, Old Chang Kee is vulnerable to natural disasters and outbreaks of diseases Interview with OCK CEO which affects the availability of supply. Thus it might affect the cost of production due to the constraints in supply factors. This poses a challenge as the increase in costs of production have to be accounted for. Industrial analysis. Porter 5 ForcesPorters 5 force will be used to illustrate the Food and Beverage competition faced by Old Chang Kee. A better understanding on the external factors would allow us to accurately assess its position in its industry locally.Intensity of RivalryThe Food and Beverage competition in Singapore is highly competitive. Old Chang Kee, in the finger food industry faces established competitors such as Mr bean, Ananas cafes, Breadtalk and Polar Puffs and Cakes Pte Ltd despite having different product stores that target at different target groups.The entrance of Take 5 and Mushroom caf faces strong competition from the food courts found locally in Singapore. For example, the Food Junction and Kopitiam and Koufu are the few food courts chain that have been established over the years. Hence, they would have a relatively wider reach to consumers since they have a greater number of chain stores locally. On top of that, these competitors have also introduced discounts to create customer loyalty . Some example would include, discount card by Kopitiam and rebates offered.Pie Kia faces competition from pastry shops such as Polar Puff and Cakes Pte Ltd that have a long history. These shops offers similar product at similar pricing.Old Chang Kees direct competitors include Breadtalk, Mr bean, Jollibean, which provides similar products at comparable pricing. Furthermore, these competitors offer a wider range of products relative to Old Chang Kee which intensified the competition that Old Chang Kee is currently facing. Furthermore competition is accentuated by the neighbourhood pastry shops that offer similar product range at a relatively cheaper price.Across its business units, Old Chang Kee faces diverse competition that leverage on product variation and low cost. Hence, it is important to emphasize on its cost and range of products offer in order to attract and retain customers.Threat of New EntrantsGiven the nature of Finger Food industry, threat of new entrants since the barriers of entry are relatively low. Firstly, initial capital outlay is relatively low since cost of equipment is low, and furthermore, research and development cost is minimal prior to starting the business. Secondly, product differentiation is present throughout the Food and Beverage industry, however this impact is minimized since the same products sold can be imitated in a short time. Hence promoting new entrants. However, effective distribution channels pose a challenge to new entrants. For example, strategic locations with high human traffic often come at a higher price thus new entrants are unable to leverage on these advantages.For food court industry, threat of new entrants are also significant since the initial capital outlay is low and low exit barriers. Hence, business in this segment is promoted.Bargaining Power of BuyersIn the food and beverage industry, customers have high bargaining power as they have very low switching cost. As a result, the demand for food is highly price elastic. Although most customers have their preferred taste and preferences, the factor of price increased would outweigh the factor of taste and preferences generally. This phenomenon is reflected during times of recession where consumers start to save money.Bargaining Power of SuppliersThe bargaining power of suppliers are relatively low since there is a large number of other suppliers. Furthermore, most customers- pastry shops, bakeries- purchase their products in bulk; such as flour, oil, and eggs. A loss in any one of these customers would mean a significant loss In profits and revenues which further suppress the bargaining power of the suppliers.Threat of Substitute ProductsAs seen earlier in the report, Breads from Breadtalk, pancakes from Mr Bean and Jollibean are product substitutes for Old Chang Kee since their prices are similar or even lower relatively. Moreover, customers also face low switching costs. Hence, threat of substitute products are seen to be a highly significant factor. 6. 7.Marketing mixes- 4 PsProduct StrategyProduct line: Old Chang Kees signature product is curry puff, which is complemented by a variety of other finger snacks such as fish balls, spring rolls and chicken wings. Under the brand name “Old Chang Kee”, these food products are sold under five different sub-brand names, including “O”, “OnStik”, “K8”, “Feelin” and “Take 5”. In addition, traditional local delights such as nasi lemak are also available in dine-in outlets such as Mushroom Caf. Unique Product Quality:Old Chang Kee operates most of its sales on a take-away basis, because it places a great emphasis on efficiency and convenience for consumers in a fast-pace society. Besides, Old Chang Kee aims to reach out to a broad range of consumer groups by providing both local and western snacks to cater to different needs of consumers. Packaging:Yellow, white and black colours are used in Old Chang Kees packaging in accordance with their outlet designs, which helps to strengthen a sense “brand image” among customers. Old Chang Kee is also acute in keeping itself with social trend. For example, “Majulah!” is incorporated onto their packaging in conjunction with the celebration of National Day.Branding strategy:Old Chang Kee adopts multi-product branding strategy, which has advantages in terms of brand equitypeople transfer their good experience with one food product to other products. I know it sounds a bit weird but at least we should allocate on paragraph to branding considering it is a quite important part of marketing.Also, picking a good brand nameold chang kee, “Old” is associated with tradition, which is fairly consistent with its product positioningPrice StrategyOn the one hand, Old Chang Kee aims to provide consumers with affordable products, which is supported by the fact that the price for its finger snacks ranges from $0.9 to $1.6, and price discounts are also offered to promote new food productsBeing a highly competitive market,(monopolistic competition), there is a very vehement price competition among OCK and its competitors. The average profit margin of food industry is 5-6%(quote Singapore stats bureau). Given its low price and profit margin, huge sales promotion and discounts are not realizable. For pricing itself, due to insufficient information on cost of production, advertising expenses, etc, we are unable to tell how OCK derives its current prices through a break-even analysis, we can be certain that OCK uses a fixed-price for one particular kind of product in its product line. This adds value to OCKs take-away style and emphasis on convenience as customers can quickly pay and go. Moreover, offering the same price all around Singapore greatly encourages customers to buy Old Chang Kee in whichever outlet available to them, preventing a potential loss of customers who are deterred by price differential in any