罗兰贝格-德国汉高公司进入中国市场策略项目建议书

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

2、ndon Madrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna ZurichNirmainterim-rptContentsPageA. Fierce competition from international and domestic players has imposed3great challenge on HenkelB. To achieve turnaround, Henkel should adopt an aggressive ex

3、pansion strategy10C. Roland Berger will help develop the appropriate strategy: project outline12D. Project organization and time frame22E. Value of the project12F. Roland Berger is a best partner of Henkel to exploit China detergent market:12selected referenceAnnex A: Case study - Qiqiang32Annex B:

4、Case study - P&G42- 2 -Nirmainterim-rptA. Fierce competition from international and domestic players has imposedgreat challenge on Henkel- 3 - After fast increase in earlier 1990th, annual growth of China detergent markethas slowed down in these yearsNational market volume of laundry detergent in Mi

5、o. tons+8.2% p.a.23%p.a.2.93.02.82.62.72.21.9199319941995199619972000* EstimationSource: Chinese light Industry Yearbook(1999), Roland Berger & Partners analysis- 4 -Nirmainterim-rptOvercapacity in detergent indudstry leads to price reduction and thus reducesthe product profitabilityOvercapcity in d

6、etergent industryPrice reduction of Major brand (RMB/Kg)Gross profitability of Whitecat regular powder- 5 -Nirmainterim-rpt 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

7、 of capacity is about 70% Marekt entry of detergent industry is pretty low and there lies a lot of unregistered factories, If taking their capacity into account, the18.016.518.817.31998年1999年5.5 4.811%3%utilizaition rate will be furthurreduced to about 50%-60%OMOTideWhitecat(regular powder)1998年1999

8、年Average price reduction of the whole industry is 10%After having established prominent position in high end market, P&G andUnilever 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(Pric

9、e：10RMB/Kg)Market stucture of middle end(Price：710RMB/Kg)Market structure of low end (Price：3 kg per capita 23 kg per capita 1.72 kg per capita10RMB/kg)7786685377459.2%11.5%12.1%13.2% Low end market account for over 50% of total market and is especially large in the low developing North and West of

10、China Middle-end product take a higher share in East and South of ChinaMiddle-end (710RMB/kg)Low-end (7RMB/kg)39.9%50.9%31.8%56.7%30.6%57.3%45.9%40.9% High end market is comparatively higher in south market because of its high income level and accptance of concentrate powderEastNorthWestSouthResourc

11、e: AC Nielson retailing audit 1999-2000East China is in intense competition and major players are all national brandsEastmarket volume by province 000 tonBrief analysis224.1115.770.360.4307.5Total: 778,000 tons Jiangsu and Henan have the largest market volume in east China Jiamei, Whitecat, GiGE and

12、 Fangcao are traditional brands with strong regional market bases distribution network is comparatively mature withsome large distributors in dominance Qiqiang has successfully penetrate east China and established leadership with strong sales campaign Libai is planing to penetrate east China Diaopai

13、 is also making efforts to enlarge its market share by offering high margin incentive to distributorsJiangsuHenanZhejiangAnhuiShanghaiIn South, we recommend Hunan and Hubei are target market for market entrybecause Libai almost control the whole low-end market in GuangdongSouthLow-end market size in

14、 South China 000 TonCompetitive landscape- 18 -Nirmainterim-rpt190Total: 745,000 tons Libai almost control the whole low-end market in GuangdonResun as a regional brand holds half of Hunans low- end market One flower and Quanli has 30% and 20% of low-end segment respectively in HubeiHun

15、an and Hubei are the target market due to their large market size and weak competitorsGuangdongHunanHubeiJiangxiFujian West region can only be Nirmas potential market in the second stagebecause of its limited market size and strong competitorWestLow-end market size 000 tonAnalysis of opportunity- 19

16、 -Nirmainterim-rpt10277696965154Total: 537,000 tons Qiqiang takes 44% of low-end market with three manufacturing sites (Sichuan, Guizhou and Sanxi) P&G take over one major local brand (Nanfeng) inchongdu to expand low-end market Whitecat has setup a manufacturing site with 80,000 ton capacity in Cho

17、ngqing Low population density and per capita consumptionSichuanGuangxiYunnanGuizhouShanxiChongqinWest region can only be Nirmas potential market in the second stageRegional and local brands play the major roles in the Northern marketLow-end market size in North 1 and North 2000 tonCompetition volume

18、 shareNorth- 20 -Nirmainterim-rpt458210North1: Liaoning, Jiling, HeilongjiangNorth2: Shandong, Hebei,Shanxi, Beijing TianjingOthersSeagull JianlongJialiDeerQiqiangOthers30%37%22%28%14%3% 2%16%30%14%Jiali MulanQiqiangYunquanTiantianNorth 2North 1Source: by Henkel (Tiantian) and Unilever (Yunquan)Exce

19、pt Qiqiang four local brands are the major players in North 1 and North 2Shandong and Hebei are suggested as strategic focus in early entry periodmarket size in North 2 sub-region 000 tonCompetitionNorth- 21 -Nirmainterim-rpt181Total:458,000 tons1326841.535.6 In Shandong, Deer and Jiali holds 30% an

20、d 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% market share, the rest are insignificantIn Shandong and Hebei a strong and

21、 dominant brand is non-existent yetShandongHebeiShanxiBeijingTianjingSpray-dry technology dominate the laundry powder industry sectorRegularProfile of major product formProduction technologyMajor brandMarket shareAverage price RMB/kgProduct featureTrendConsumer acceptanceSpray dry Tide Whitecat Qiqi

22、ang90%7.9 Hollow Low density Foaming High water solubilityWell acceptedin rural-Dry mix Ariel Whitcat8%11.4 Solid High density Non-foaming Excellent stain removing efficacyHigh price undermines affordability and consumer acceptableAgglomera- tion OMO Gaochao(whitecat)2%18.0 High fluidity Excellent s

23、tain removing efficacyNew productConcen trateUltra- concen- trateSource: Roland Berger & Partner interviews- 22 -Nirmainterim-rptPrice and money value are two most important factors influencing rural consumers purchasing decisionRural consumer preference Popular acceptable price in rural market: 6.0

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

25、: Roland Berger & Partners interview- 24 -Nirmainterim-rptQiqiangs 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%Price7060504030201007(RMB/kg)65.2 5.456.06.26.36.4433% 3%230%6%5%3% 3% 3%10Volume shar

26、ePrice is the first decision factor for rural consumer to buy detergent powerSource: Roland Berger & Partners interview- 26 -Nirmainterim-rptExample: Decision factors of rural consumerBack-upKey factor Importance Rural consumer behavior Price Stain removing Efficacy Foaming Fragrance Water solubilit

27、y Whitening Enzymatic+ 0- Price is the most important factor to affect consumer behavior in rural market The consumer also pay considerable attention to the stain removing efficacy of detergent powder The rural consumer often evaluate the stain removing ability through the foaming effect of the dete

28、rgent powder Most of the rural consumer also like the fraqrance brought by deterrent powder Because in general fake product cant solubilized in water, the feature can help consumer distinguish real product with fake product The rural consumer seldom care for the whitening and enzymatic abilityof det

29、ergent productThe customer behavior is fit with Nirmas low price strategyIn order to reduce the transportation cost, Qiqiang set up seven mainfacturingsite national wideExample: Qiqiangs manufacturing site vs. Market performanceLocation of manufacturing site of QiqiangBack upu Qiqiangs headquarter22

30、.7%Market share by region14.0%13.7%5.5% BenxiNeimenguShanxi Xian Sichuan AnhuiNo manufac-G uizhouture siteEastSouthWestNorth3A systematic expansion strategy should be appliedDescriptionARegional penetrationBLow priceCFront attackDMotivated dealerEBenefited customer Focus on one regional market and c

31、oncentrate the marketing resources at the beginning Using accumulated experience to expand new market Recommended 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 b

32、uilt up market to a qualified distributor to manage Development a incentive sales policy to motivate the dealers along the distribution channel Adopting well-acceptable approach to promote in the rural marketSource: Roland Berger & Partners interview and analysis- 28 -Nirmainterim-rptBThe target ret

33、ail price for Nirma should be less than 6 RMB/kgRetail price of major brand in Chongqing RMB/kgPrice positioning7.16.56.255.56.05.3 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 80% of r

34、etail priceLibaiWhitecatQiqiangNirmaResun2)The initial retail price should be higher for1) Libais headquater is in Guangzhou and it is mostly produced by Resun in Hunan2) Local brand in Hunan provinceSource: Roland Berger & Partners survey and analysissetting up brand imageBQiqiang fast expansion stems from its appropriate marketing strategy andmanufacturing strategy- 29 -Nirmainterim-rptBack upExample: Success factors for QiqiangSuccess factors for QiqiangMarket share of Qiqiang80%p.a.13.2%12.6%8.3%7.2% Low