某咨询——德国汉高(进入中国市场策略)项目建议书

1、- 1 -Achieving leadership in China detergent market Project proposal Henkel (China) Investment Co. Ltd. ,Roland Berger & Partners International Management ConsultantsBarcelona Beijing Berlin Brussels Bucharest Budapest Buenos Aires Delhi Detroit Dsseldorf Frankfurt Hamburg Kiev Kuala Lumpur Lisb

2、onLondon Madrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna Zurich- 2 -ContentsPageA.Fierce competition from international and domestic players has imposed 3 great challenge on HenkelB. To achieve turnaround, Henkel should adopt an aggressive expansio

3、n strategy 10C.Roland Berger will help develop the appropriate strategy: project outline12D. Project organization and time frame 22E. Value of the project 12F. Roland Berger is a best partner of Henkel to exploit China detergent market:12 selected referenceAnnex A: Case study - Qiqiang32Annex B: Cas

4、e study - P&G42- 3 -A. Fierce competition from international and domestic players has imposed great challenge on Henkel- 4 -After fast increase in earlier 1990th, annual growth of China detergent market has slowed down in these yearsNational market volume of laundry detergentin Mio. tons19931994

5、1995199619972000* EstimationSource: Chinese light Industry Yearbook(1999), Roland Berger & Partners analysis1.92.22.82.62.72.93.0+8.2% p.a.23%p.a.- 5 -Gross profitability of Whitecat regular powderOvercapcity in detergent industryPrice reduction of Major brand(RMB/Kg)Overcapacity in detergent in

6、dudstry leads to price reduction and thus reduces the product profitability At present, there are about 150 manufactures in detergent industry with capacity of 3.8 million tons, but total market volume is about 2.7 million tons, so the utilization rate of capacity is about 70% Marekt entry of deterg

7、ent industry is pretty low and there lies a lot of unregistered factories, If taking their capacity into account, the utilizaition rate will be furthur reduced to about 50%-60%11%1998年年 1999年年3%TideOMO18.016.518.817.35.54.8Whitecat(regular powder)1998年1999年Average price reduction of the whole indust

8、ry is 10%- 6 -After having established prominent position in high end market, P&G and Unilever begin to penetrate middle and low end marketMarket structure of high end(Price：10RMB/Kg)Market stucture of middle end(Price：710RMB/Kg)Market structure of low end(Price：7RMB/Kg)Proportion of high end ma

9、rket is 11.9% Proportion of middle end market is 31.8% Proportion of low end market is 56.3%20%20%9%9%2%2%69%69%13%13%9%9%3%3%75%75%6.0%6.0%5.6%5.6%88.4%88.4%P&GOthersBenckiserUnilever P&GBenckiserOthersHenkelHenkelUnileverOthersResource: AC Nielson retailing audit 1999-2000- 7 -Brand Share

10、CompanyTide 6.0% P&GAriel 2.2% P&GOMO 2.4% UnileverPower 28 1.1% BenckiserPersil 0.1% HenkelMarket share of international playersbrands in different segmentBrand Share CompanyGFL 2.2% P&GPanda 1.9% P&GWIPP 1.0% HenkelTianjin 1.8% HenkelDosia 1.0% BenckiserBack-upMarket stucture of mi

11、ddle end(Price：710RMB/Kg)Market structure of low end(Price：10RMB/Kg)Resource: AC Nielson retailing audit 1999-2000- 8 - 9 -Although a late comer, Benckiser has successful penetrated north market with Dosia through well-designed entry strategy Through acquiring distributors from P&G, Dosia chose

12、Liaoning province as its initial entry areaIn Heilongjiang and Jilin province, competitors are not so strong as that in other parts of China. local brands, such as Tiantian, are in dominant positions, so Dosia chose these two province as subsequent penetration areasCompetition is in choas in Shandon

13、g, and distribution network is not well regulated with lots of small distributors/wholesalers competing with each other, so it is easy for Dosia to penetrate the market and cultivate its qualified disbition channelIn order to guarantee the success, channel penetration is also backed up by strong adv

14、ertisement champaign Marekt share of Dosia in north China Market entry design 5.5%7.3%8.3%9.6%9.4%9.4%11.7%Jan 1999Mar 1999May 1999Jul 1999Sep 1999Nov 1999Jan 2000Resource: AC Nielson retailing audit 1999-2000- 10 -Some domestic players are also making efforts to achieve fast growth and national pre

15、senceMarket share of QiqiangMarket share of Libai6.0%6.8%8.0%13.7%16.7%199519961997199819990.2%0.2%0.3%0.3%3.8%3.8%5.7%5.7%6.8%6.8%19951996199719981999Resource: AC Nielson retailing audit 1999-2000- 11 -Fast growths of domestic players are supported by their rural focus strategy, nationwide manufact

16、uring network and direct sales model Market penetration strategy taken by fast growing domestic playersRural focus strategyNationwide manufacturing networkDirect sales modelRural market is large but is dominanted by weak regional brandsInternational players have weak performance in rural areaLogisti

17、c cost is high in detergent industry accouting for over 10% in total value Long distance transportation in China is not oonvient For a new comer, it is not easy to get qualified local distirbutorsReason MethodResult First penetrate rural market and townAfter achieving strong perfromance in rural are

18、a, then penetrate city and large countyAcquiring local players in different areas (Qiqiang)Signing OEMcontracts with local players in different areas(Guangdong Libai)Directly selling products to low level dealers or retailing outletstrong channel promotionAvoiding competing with strongs playersGaini

19、ng market share with comparatively low marketing investmentAvoiding competing with local playersReduction in logistic costFast market penetrationBut the sales expense is high and the sales force should be very diligent- 12 -In order to achieve turnaround, Henkel should adopt an aggressive expansion

20、strategySix regional brands with comparative weak market performanceDeterioration of market share for each brand, defeated by strong international or domestic brands one by oneAggressive expansion strategyNo change Turnaround pointLeadership in detergent market- 13 -Strategy formulation should be ba

21、sed on full understanding of China detergent market and full consideration of three strategic issuesStrategy formulationChoice of focus brand and strategic expansion routeEstablishing reliable and low cost logistic networkDeveloping rural entry modelFull understanding of China detergent market- 14 -

22、Per capita consumption gradually decreases from south to north and from east to westConsumption of laundry detergent in Chinakg, per capitaSource: Roland Berger & Partners interview1.8823 kg per capita1.72 kg per capita3 kg per capita1.881.881.9521.821.953.351.951.952.352.353.351.6821.681.682.35

23、Much low area- 15 -2512(Shanghai)The high population density is located in the North China plainSource: Roland Berger & Partners interview146(Jilin)343(Hebei)586(Shandong)578(Henan)715(Jiangsu)273(Fujian)308(Hunan)392(Guangdong)108(Yuannan)362(Chongqing)471(Anhui)Back upMunicipality population d

24、ensity (includeing suburb area)Shanghai2512Beijing738Tianjin866Chongqing362over 500 capita per square kilogram 276(Liaoning)866(Tianjin)738(Beijing)209(Shanxi)443(Zhejiang)201(Guangxi)326(Hubei)188(Sanxi)177(Sichuan)400500 capita per square kilogram 300400 capita per square kilogram 200300 capita pe

25、r square kilogram 100200 capita per square kilogram less 100 capita per square kilogram - 16 -For different region, market segment structure is also different because of various income level and consumption habitSegment structure by regionCommentsNorthWestEastSouth Low end market account for over 50

26、% of total market and is especially large in the low developing North and West of China Middle-end product take a higher share in East and South of China High end market is comparatively higher in south market because of its high income level and accptance of concentrate powder50.9%56.7%57.3%40.9%45

27、.9%30.6%31.8%39.9%9.2%11.5%12.1%13.2%Total,000t778668537745High (10RMB/kg)Middle-end(710RMB/kg)Low-end(7RMB/kg)Resource: AC Nielson retailing audit 1999-2000- 17 -East China is in intense competition and major players are all national brandsmarket volume by province 000 tonBrief analysis 115.7Jiangs

28、u 307.570.3224.1HenanZhejiangShanghaiAnhui60.4 Jiangsu and Henan have the largest market volume in east China Jiamei, Whitecat, GiGE and Fangcao are traditional brands with strong regional market bases distribution network is comparatively mature with some large distributors in dominance Qiqiang has

29、 successfully penetrate east China and established leadership with strong sales campaign Libai is planing to penetrate east China Diaopai is also making efforts to enlarge its market share by offering high margin incentive to distributorsTotal: 778,000 tonsEast- 18 -Low-end market size in South Chin

30、a000 TonSouthIn South, we recommend Hunan and Hubei are target market for market entry because Libai almost control the whole low-end market in GuangdongCompetitive landscape 170Hunan190118179HubeiJiangxiGuangdongFujian84 Libai almost control the whole low-end market in Guangdong Resun as a regional

31、 brand holds half of Hunans low-end market One flower and Quanli has 30% and 20% of low-end segment respectively in HubeiHunan and Hubei are the target market due to their large market size and weak competitorsTotal: 745,000 tons- 19 -West region can only be Nirmas potential market in the second sta

32、ge because of its limited market size and strong competitorLow-end market size000 ton77Sichuan15469102GuangxiYunnanShanxiGuizhou69 Qiqiang takes 44% of low-end market with three manufacturing sites (Sichuan, Guizhou and Sanxi) P&G take over one major local brand (Nanfeng) in chongdu to expand lo

33、w-end market Whitecat has setup a manufacturing site with 80,000 ton capacity in Chongqing Low population density and per capita consumptionWest region can only be Nirmas potential market in the second stageTotal: 537,000 tonsWestAnalysis of opportunity Chongqin65- 20 -Regional and local brands play

34、 the major roles in the Northern marketLow-end market size in North 1 and North 2000 tonCompetition volume shareNorth 228%22%3%North 130%37%TiantianOthers2%14%30%QiqiangYunquanMulanJialiQiqiangDeerJialiJianlongSeagullOthersSource: by Henkel (Tiantian) and Unilever (Yunquan)Except Qiqiang four local

35、brands are the major players in North 1 and North 2North1:Liaoning, Jiling, Heilongjiang458210North2:Shandong, Hebei, Shanxi, BeijingTianjing14%North16%- 21 -Shandong and Hebei are suggested as strategic focus in early entry periodmarket size in North 2 sub-region000 tonCompetition68Shandong18141.51

36、32HebeiShanxiTianjingBeijing35.6 In Shandong, Deer and Jiali holds 30% and 25% of the low-end market respectively. But weak financial srength and less sophisticated marketing skill undermine their competitiveness In Hebei the detergent market is highly fragmented with Qiqiang winning less than 20% m

37、arket share, the rest are insignificantIn Shandong and Hebei a strong and dominant brand is non-existent yetTotal:458,000 tonsNorth- 22 -ConsumeracceptanceProfile of major product formTrendProduct featureAverage price RMB/kgMarket shareMajor brandProductiontechnologyRegularConcen-trateUltra-concen-t

38、rateSpray dryDry mixAgglomera-tion Tide Whitecat Qiqiang Ariel Whitcat OMO Gaochao(whitecat)90%8%2%7.911.418.0 Hollow Low density Foaming High water solubility Solid High density Non-foaming Excellent stain removing efficacy High fluidity Excellent stain removing efficacyWell accepted in ruralHigh p

39、rice undermines affordability and consumer acceptableNew productSpray-dry technology dominate the laundry powder industry sectorSource: Roland Berger & Partner interviews- 23 -Rural consumer preferencePrice and money value are two most important factors influencing rural consumers purchasing dec

40、ision Foaming Fragrant Water solubility Big package size (400g, 750g)Product Primarily through grocery in village / town Market / fair especially weekly marketPlace Effective tool to induce trial during introduction period Using daily necessities as prize is well acceptedPromotion Popular acceptable

41、 price in rural market: 6.0 RMB/kg Price rangeSource: Roland Berger & Partners interview- 24 -Qiqiangs low price strategy proves to be successful in the low-end segmentRelative price comparison in low end segment (7RMB/KG)Total low end segment =100%0 01010202030304040505060607070012345675.25.46.

42、06.26.36.4TiantianResunYueyuehongFangcaoSeagullQiqiangQuanliMianghuaPrice(RMB/kg)Volume share3% 3%30%6%5%3% 3% 3%- 25 -Rural consumer behaviorImportanceKey factorPrice is the first decision factor for rural consumer to buy detergent powerPriceStain removing EfficacyFoamingFragranceWater solubilityWh

43、iteningEnzymatic+0-Price is the most important factor to affect consumer behavior in rural marketThe consumer also pay considerable attention to the stain removing efficacy of detergent powderThe rural consumer often evaluate the stain removing ability through the foaming effect of the detergent pow

44、derMost of the rural consumer also like the fraqrance brought by deterrent powderBecause in general fake product cant solubilized in water, the feature can help consumer distinguish real product with fake productThe rural consumer seldom care for the whitening and enzymatic ability of detergent prod

45、uctExample: Decision factors of rural consumerThe customer behavior is fit with Nirmas low price strategySource: Roland Berger & Partners interviewBack-up- 26 -Location of manufacturing site of QiqiangMarket share by region14.0%5.5%22.7%13.7%In order to reduce the transportation cost, Qiqiang se

46、t up seven mainfacturing site national wideSource: Roland Berger & Partners interviewEastSouthWestNorthGuizhouBenxiSichuanNeimengShanxiAnhuiXianNo manufac-ture siteExample: Qiqiangs manufacturing site vs. Market performanceQiqiangs headquarterBack up- 27 - Focus on one regional market and concen

47、trate the marketing resources at the beginning Using accumulated experience to expand new market3 A systematic expansion strategy should be applied DescriptionSource: Roland Berger & Partners interview and analysisARegional penetrationBLow priceCFront attackDMotivated dealerEBenefited customer R

48、ecommended retail price is about 5.56.0 RMB/kg Higher price in the beginning to build up brand image Allocating strong sales team to a new market by intensive marketing and promotion Delegate the built up market to a qualified distributor to manage Development a incentive sales policy to motivate th

49、e dealers along the distribution channel Adopting well-acceptable approach to promote in the rural market- 28 -Retail price of major brand in ChongqingRMB/kgB The target retail price for Nirma should be less than 6 RMB/kg6.25Libai7.15.36.5WhitecatQiqiangNirmaSource: Roland Berger & Partners surv

50、ey and analysisResun2)5.56.01) Libais headquater is in Guangzhou and it is mostly produced by Resun in Hunan2) Local brand in Hunan province 6.0RMB (0.72USD)/kg is the most popular accepted price for rural market The suggested retail price for Nirma is 5.5 6.0 RMB/kg The whole selling price is about

51、 80% of retail priceThe initial retail price should be higher for setting up brand imagePrice positioning- 29 -Success factors for QiqiangMarket share of QiqiangB Qiqiang fast expansion stems from its appropriate marketing strategy and manufacturing strategy12.6%Aug.-Sep. 977.2%13.2%8.3%Dec.-Jan. 98

52、Apr.-May. 98Aug.-Spt. 98 Low cost & low price- The salary level in Shanxi is about half of whitecast in Shanghai- raw-material advantage its Na2 So4 has 35% market share in China Retail price: 6 RMB/kg- Drreet approach low-level wholsaler - Use strong promotion to push product Local manufacture

53、& local sales- Seven manufacturing sites national wide with headquater in shanxi Well financed - 390 million RMB (47mio USD) was financed in stock market in April 199780%p.a.Example: Success factors for QiqiangBack up- 30 -ExampleDescription of approach Develop customers and build up sales netwo

54、rk Delegate a reliable distributor to manage the network The team is assigned to another new market Build up a long-term agent relationship with the distributorExample: New market entry approach in ChongqingFront attack Use several qualified agents to sell product with long-term credit term (3 month

55、s) Send a sales team to support agent to promote as well as build up own know-how Take over the sales network and directly sell to whole sellersJoint attack Diaopai Yuxiu Power 28 (benckiser) Weibai (Henkel) Establish own sales branch locally Directly sell product to wholesalers and large retailerDi

56、rect attack(sell) Tide (P&G) OMO(OMO) QiqiangSource: Roland Berger & Partners? interviewC Front attack strategy is recommended for Nirma to penetrate new market- 31 -Employ distributor and its own sales force (about 2000) to explore market in the meantimeDistributor focus on existing channel

57、s and areasWhitecat sales force focus on unexplored new marketsBe flexible to different market situationLow reliance on distributors Possible conflict between distributors and its own sales forceTherefore, distributors may lose interest to work with WhitecatSlow response to changing market with hier

58、atial management, e.g. the approval for a promotion plan will last 3 monthsC Whitecat uses distributor as well as its own sales force to jointly explore marketsDistributorWholesalerDescriptionWhitecats distribution channel mappingStrategyCONSSecondary distributorRetailerEnd consumerWhitecat regional

59、 sales officeEnd consumersRetailerBack upWholesalerDistributorWhitecatSource: Roland Berger & Partners? interviewPROSIncapable to response to changing market and consumers- 32 -DescriptionQiqings distribution channel mappingDispatch huge sales force to directly approach wholesalers and retailers

60、Sales Rep. regularly visit wholesalers and retailersProvide efficient logistics support and serviceRapid penetration into rural areaBuild fist-hand market an consumer knowledge Quick learningDifficult to manage huge sales force (about 2000)Delay of money collection and poor credit-term managementHigh selling expensesChannel conflictC Qiqiangs distribution system greatly facilitates its market expa