Hsu-Fu-Chi-Marketing-Assignment

1、A marketing strategy for the development of Hsu Fu Chi International Ltd in Chinese biscuits marketIntroductionThis report will survey the Hsu Fu Chi International Limited in its biscuits market in China and make some suggestions for its marketing strategy in the next 5 years. To develop the marketi

2、ng plan, firstly the report will analyse the macro environment in Chinese biscuits industry mainly by using PEST model. Secondly, a micro-perspective view will be taken into the firm to consider its strengths and weakness and integrated the organization and environment assessments with a SWOT analys

3、is. Thirdly, the report will briefly review the Hsu Fu Chis main competitors. After the market and competition analysis, the report will summarise the data and provide a rational marketing strategy for the company.Executive SummaryHsu Fu Chi International Limited is a snack food enterprise which ori

4、gins from Taiwan China and registered in Guangdong Province of China in 1992. After it listed in Singapore Exchange Limited in 2006, Hsu Fu Chi now has more than 3.7 billion Yuan annual operating income, 460 million Yuan annual net profit, 100 operating sales offices and more than 16000 directly con

5、trolled retail points, 500 thousand square metres office area, and over 10 thousand staffs (Hsu Fu Chi:2011). The company has three main business segments: Candy Products (50%), Biscuits and Cookie Products (30%), and Sachima Products (20%), over 90% of its business are based in China market (Hsu Fu

6、 Chi Annual Report: 2010).The primary marketing objective is to enhance the companys sandwich biscuit 推荐精选market share by 5 percent in China market and 20% annual sales increase in biscuit business, making it a giant in Chinese sandwich biscuits industry for the next 5 years.Industrial analysis and

7、PEST modelBiscuits are the major products of snack food, with the level up of the Chinese living standard for its success in economic reform, the demand of snack food is increasing and that gives the biscuits market a great potential and attractiveness. Despite the fierce competition in the market,

8、the Chinese biscuits business is still attractive to Hsu Fu Chi.Political factorsIn recent years, the Chinese government kept strengthening the management of biscuit business, enhancing the quality of biscuits products; especially, in order to meet the requirement of the domestic and international t

9、rade market and protect the legal rights of consumers, the Chinese government implemented new biscuits national standard regulations in 2008 instead of the old 13 biscuits rules (Chinese Food Science and Technology: 2008). With the new biscuits regulations, the nutritional value of the products must

10、 be marked on the package which led the emphasise of the competition not just on the taste but also the nutrition. Such change of the standard requirement increased the entry requirement of biscuits business in China; moreover, it could help to provide a regular and mutual macro market environment f

11、or the biscuits companies.Economical factorsWith the economic reform and the opening of the domestic market, the GDP of China kept an average 10 percent annual increase since early 1990s; after China joined WTO 推荐精选in 2001, Chinas per capita annual income maintained an average 10 percent increase ra

12、te (National Bureau of Statistics of China: 2011). Accordingly, the increase of the spare money enhanced the purchasing power of the Chinese and that is beneficial for biscuits companies to increase their sales income and expand the biscuits market in China. Furthermore, the healthy and steady econo

13、mic environment, for instance, avoiding and diminishing the impact of the global financial crisis in 2008 and managing to keep 10 percent increase at the period, is another factor which attracts the investments in Chinese market and promote the development of biscuits companies.Social factorsWith th

14、e increase of the personal income, the living standard in Chinese society is enhancing. Following that trend, the demand of the biscuits is increasing. However, the requirement of the biscuits business is not just about the increasing of biscuits quantity or production, but also the improvement of b

15、iscuits quality and the packages; within the quality, it is not just about taste of biscuits, but also the inside nutrition. Such change of the customers demand resulted in great variety of biscuits, providing great development space to the biscuits companies while giving them more complex and advan

16、ced requirements.Technological factorsAs the requirements of biscuits business are becoming higher and so does the technological requirements related to it. As response to the trend, the big biscuits business companies such as Kraft, Master Kong and Want Want all setup their research and development

17、 departments in China, using the advanced technological tools to controlling the cost while enhancing the biscuits products quality and production efficiency. Besides, the technological factor does not just affect the production part of biscuit business, but the whole period of product line especial

18、ly for 推荐精选the sales part. With the proliferation of internet usage, the online shopping is becoming increasingly popular in China and this opened a new sales route and market place for the biscuits business.In general, the whole biscuits industry is still at immature stage which indicates the Chine

19、se biscuits market has great potentials. Meanwhile, the competition among the biscuits companies is becoming fierce while the requirements of the products are increasing. Therefore, the biscuits companies should develop their technologies to support their improvement of biscuits products and expand

20、the existing market in a new and improved way.SWOT analysisStrengths1. A Big and famous brand in China. With over 4 billion Yuan total revenues, 2 billion Yuan gross profit in 2010 and keeping an average 10 percent grows since 2006, Hsu Fu Chi is one of the most profitable and biggest snack food ent

21、erprises in China and this enables Hsu Fu Chi the capability and resources to invest and expand the biscuits businesses. Awarding as “The top ten competitive brand in Chinese baking industry” and gaining numerous of other honours, successful to be No.1 sales in Chinese candies market for the past co

22、ntinuous 11 years rewarding it the “synonym of candies” in China, Hsu Fu Chi is one of the most famous snack food brands in China and this gives it the advantages with high brand recognition when competing other biscuits companies (Hsu Fu Chi Annual Report: 2010).2. Wide and unique sales network acr

23、oss China. Benefiting from the experiences in candies sales, Hsu Fu Chi has a mature sales network across almost all areas in China.推荐精选 Different from many other biscuits companies which mainly depending on the sales agencies, Hsu Fu Chi does not neglect the resources of sales agencies but mainly u

24、ses their own direct controlled sales points which give it a positive position when negotiating with the agencies. Such an existing unique and mature sales network is beneficial for Hsu Fu Chi to strengthen its biscuits business and enlarge the market share which means Hsu Fu Chi can use its candies

25、 sale routes to sale its biscuits products.3. The unique style of Hsu Fu Chis sandwich biscuits: traditional based and integrated modern elements. Orientated from Taiwan which is a special part of China, Hsu Fu Chi keep emphasising on traditional taste favour of Chinese while integrating some wester

26、n or modern elements into its cookies and biscuits products, making them easy to be accepted and loved by Chinese consumers. Such a special traditional Chinese culture based background rendered Hsu Fu Chi a competitive advantage in seeking the unique favour taste of Chinese when competing with other

27、 foreign companies in biscuits market in China.Weaknesses1. Inadequate investment in online market. As the internet has been widely used in China, the online market is becoming inevitable to the biscuits companies. However, after checking some main websites about Hsu Fu Chi, neither the official web

28、sites nor its online e-shop agencies can provide affluent information about the company and the products or give great contribution in biscuit sales comparing other competitors such as Kraft and Master Kong. In other words, Hsu Fu Chi fails to take advantage of the impact of internet to expand its b

29、iscuits market efficiently.2. Mixed with candies in sales and not enough segmentations for biscuits. The main 推荐精选sandwich biscuits of Hsu Fu Chi are the French cookies, but most of their sales comes from the south of China and the sales trend is highly influenced by the sales cycle of candies which

30、 focuses on the Spring festival of the year (Hsu Fu Chi Annual Report: 2010). Such tightly mixed with candies makes its biscuits sales unstable.3. Biscuits products are some homogeneity to other snacks (both foreign and domestic brands). Although Hsu Fu Chi emphasises the uniqueness of the French co

31、okies, there are still a certain number of similar biscuit products produced by other companies, the creativity and promotion of the biscuits is still needed to be improved.Opportunities1. Great market potential in Chinese biscuits business. According to research done by Chinese marketers, the avera

32、ge biscuits consumption one person per year in China is around 3 KG while the data in developed countries is about 30KG or even the data in middle class developed nations reaches around 15KG (Chinese Food Industry: 2008); therefore, the future of Chinese biscuit market is bright.2. Increasing demand

33、 for brand and high quality biscuits products. With the level up of living standard, the demand for the biscuits is becoming more concerned on the taste and nutrition. Sandwich biscuits are potential products which can fit these trends. Especially, some small and middle cities have more attractivene

34、ss for less fierce competition but great potential there.推荐精选Threats1. Increasing competition. The competition in Chinese biscuits market is becoming increasingly fierce especially after Kraft acquired Shanghai Donane Biscuits Foods Co Ltd in 2007 which made Kraft had the biggest market share (over

35、16.5%) in China (Euromonitor: 2010). The Krafts ambition of monopoly in Chinese biscuits market gives great pressures to other biscuit companies. Meanwhile, the number of biscuit companies is increasing.2. Homogeneity and the risk of replacement by other companies. As the increasing number of biscui

36、ts companies and the fierce competition, the unique style of Hsu Fu Chis biscuits products may be copied by other companies, harming Hsu Fu Chis market share or even replace it.Competitive reviewThere are at least three main competitors that Hsu Fu Chi should concern about in the Sandwich biscuits m

37、arket.1. Kraft Foods China. The second largest food company in the world, originated from America in 1903 and came into Chinese market in 1984 with great ambitions, Kraft Foods China occupied nearly one fifths of the Chinese biscuits market and almost all of the companies biscuits products aimed at

38、the middle and premium market. There are several famous brand under the companys monitor: Pacific (4.4%), Danone Milk Crispy(2.6%), TUC (2.4%), Ritz (2.3%), Chips Ahoy!(1.4%), Oreo(1.4%),Hi-Calcium Soda(1%), Prince (0.7%) (Euromonitor: 2010). Each of the above brands is an unignorable threat to Hsu

39、Fu Chi especially the Oreo which is the most popular sandwich product in China and Danone Milk Crispy推荐精选 which is another favour by Chinese. Having more resources, more experiences in biscuits business, more advanced technology and broader global view, the company is the biggest threat to Hsu Fu Ch

40、i. 2. Want Want Group. This company has the same original place with Hsu Fu Chi and occupied the third largest biscuits market share in China (Euromonitor: 2010). With the similar target market and unique promotion, its products: “Breezy Wafer” are a strong competitor in middle and premium Sandwich

41、biscuits market with Hsu Fu Chi (Want Want: 2010). But the product has only one taste so far and this is an opportunity for Hsu Fu Chi.3. Ting Hsin International Group (Master Kong). Orientated from Taiwan and entered the mainland China in 1995 aiming at the middle and premium biscuits market, with

42、good promotion and benefiting from the mature sales network of other products such as noodles and drinks, the main biscuits products: “3+2 soda sandwiches biscuits” have unique taste and helped Master Kong to have the fourth largest biscuits market share in China (Master Kong: 2010). Although the bi

43、scuits products are a little different, the resources and major target market of Master Kong have a certain degree similarity with Hsu Fu Chi.Objectives in next five yearsThis report is planning to enhance the biscuits brand fame of Hsu Fu Chis sandwich biscuits products and expand its sandwich bisc

44、uits market share by 5 percent. In the next five years, the annual sales of Hsu Fu Chi in sandwich biscuits are expecting an average 20% increase per year, helping Hsu Fu Chi to reach about 3 billion Yuan revenue in 2015 in the cake and biscuits business. As the competition is becoming fierce, Hsu F

45、u Chi should invest more resources into the biscuits market. The 推荐精选company should use its competitive advantages effectively and expand the Chinese market not just in some big cities but also some small and middle city areas.Marketing strategiesProduct strategy:According to a marketing survey cond

46、ucted by a Chinese planning organisation, nearly 80 percent of the biscuits consumers are female and even inside the female groups, the preferences of age groups between 17-27 and 27-37 are quite different (Hua Ding: 2008). Therefore, the design and production of Hsu Fu Chis sandwich biscuits will p

47、ut more emphasis on the female market, enhancing the attractiveness of the products to the females by better feminine package design and more specific segmentations for different ages of females. As aiming at the middle and premium market, the production of the sandwich biscuits will pay attention t

48、o the nutrition especially the low calories diet because most of the females concern about keeping fit. Secondly, because of great scale areas of China, the tastes of food preferences diverse among different regions. For instance, generally most persons in the south areas prefer sweet while the majo

49、rity of people in the northwest like the taste of spy (Eastern Fortune: 2009). As a product which sales across the whole China, the sandwich biscuits of Hsu Fu Chi should extend its existing three tastes to more tastes according to the region.Lastly, the sandwich biscuits will make some differences

50、to its strong competitors Oreo (Krafts) and Master Kongs “3+2 sandwich biscuits”. Since the tastes of the later two products are a little stiffer, the sandwich biscuits of Hsu Fu Chi will be improved to be easier to digest and crunch with targeting at elder ages. With a population statics of euromon

51、itors (Babies and Infants:2010), the greatest population 推荐精选growth rate will lies in the aged group segmentation during 2010 and 2010 in China which give great potential for the products.Branding strategy:The brand mark of sandwich biscuits products will have a little change from the traditional fa

52、mous mark of Hsu Fu Chis candies products which has a strong festival atmosphere oriented and known as the “synonym of candies”. The change will take off some festival elements from the old mark and add some casual elements into it. For example, add some romantic symbols into it which relate to Fren

53、ch cultures for which the core sandwich products- “French sandwich cookies” are originated. However, the sandwich products will continue to use the Hsu Fu Chi brand for its good quality fame.Moreover, the sandwich biscuits products will use a unique name under the name of Hsu Fu Chi and emphasize th

54、e unique name gradually to enhance the customers imaginations of Hsu Fu Chis biscuits products other than candies. The existing name “French sandwich cookies” is too general and easy to be forgotten by the public. Such a change will help to distribute the biscuits not just limited to the candies pro

55、ducts sales points but more broadly.Pricing strategy:The company will use a mixed pricing strategy for the sandwich products.Firstly, for the companys existing direct controlled sales points which set up a special district for all products of Hsu Fu Chi in big supermarkets, the biscuits products wil

56、l remain its existing pricing policy: set up the same price for all of the products and just calculate by total weight. Such a strategy is benefit to Hsu Fu Chis overall sales performance and enhances the biscuits brand fame with the help of candies products.Secondly, for some sales points other tha

57、n the above special districts in big cities such 推荐精选as Guangzhou, Shanghai, Wuhan and Beijing, the sandwich biscuits products will continue its high price strategy which keeping the similar level with its competitors while improving the products. Aiming at middle and premium market, there are a gre

58、at number of potential customers in such big cities and many of them are more concerned about the quality than the price.Thirdly, for some small and middle size cities, the sandwich biscuits products will make some discounts with the promotion of increasing the proportion of distribution. Such strat

59、egy can trigger the sale in these areas and increase the market share.Promotion strategy:We will use various media to amplify the unique taste and high quality of the products. Apart from the existing strategy which makes the promotion by the direct control sales points to put some advertisement of t