International Marketing (MKT343)

Professor Thea BellosSummer 2012

Anh Thi Van Tran (Anh) Kuan-chieh Huang (Jerry)

Piyanuch Kangwankijwanich (Tu) Ting Tseng (April)

AGENDA

1. Missions and Challenges2. SWOT Analysis

3. Business Concepts4. Industry Analysis5. Country Analysis

6. Strategic Marketing Direction7. Overall Strategic Approach

8. Marketing Mix & IMC9. Conclusion

MissionIn U.S. - 170 restaurantsIn 2012 - expand to China:

Shanghai, Beijing, Guangzhou

ChallengesTo understand Chinese cultures and tastesTo follow regulations of commercial TV

SWOT ANALYSIS

StrengthsVariety of menus Appreciated awardsIntensive branches

WeaknessesDeclining market share

OpportunitiesGrowth of food tourism Expanding restaurant industry

ThreatsRising labor costsStrict regulationsNumerous competitors

CONCEPT

Business ModelsBuild partnership with localsMaintain CRMCooperate with governmentSet positioning as “Premium American Dinning”

Key FactorsQuality control, venue selection, venue set-up, staff training, innovation, revenues and sales, and market share

RisksHeavy debt in ChinaRestrictions of foreign investment: to protect domestic companies

INDUSTRY ANALYSIS

Size and Growth TrendsPredict to grow 16.5% annuallyBoost sales (lunch/dinner)Eat out trend:

High income, high quality

Vulnerability to Economic FactorsIncrease restaurant revenues:

Rising household incomesMany business activities

Unstable factors:Global financial crisis High competition in fast food

INDUSTRY ANALYSIS

Technological & Seasonal FactorsGood event = More competitive For example, the weddings, event planning, and celebration have fully influenced on the full-service restaurant’s sale.Public holidays and festivals Beijing Olympics

Regulatory IssuesChina regulations

Food safety supervision Smoking banEnglish menuWaste management

INDUSTRY ANALYSIS

Financial ConsiderationFactors influence on industry revenues

Wide range of industry Variety size of restaurants

Operating costsRaw materials, wages, rentHarsh regulations

Risk AnalysisInflation

Too strong liquidity growthOver demand Mounting input costs

Wages and oil priceNatural disasters

Increasing vegetable price

China is one of the world most growing countries

Competitive Advantages Low labor cost Abundant natural resources Major leaders of international

organizations

COUNTRY ANALYSIS

Economic StatisticsGDP is growing 8% annuallyUnemployment in urban areas are decreasing

from 4.65% to 4.1% Middle class is increasing

from 65.5 mill in 2005 to 80 mill in 2007The government is resisting external pressures

due to country’s benefits of export

COUNTRY ANALYSIS

Government/Political/Legal One-child-family policy: 1.5 bil by

2030 One-party state to control

regulations High budget deficit 1.1% of GDP in 2011 > 1.9%

in 2012 Inflation concerns: Rising interest

rates Effects of joining WTO Having relationship with

other countriesAffecting domestic markets

COUNTRY ANALYSIS

Risk AnalysisOne-party state: Unstable regulationsHigh debt burden: Demand of local

governmentRestrictions for foreign companies

Chinese-foreign equity Joint Venture

Different kind of costsTo educate laborsTo increase labor costs

Corruption: Judicial decisions Contract enforcementProtection of property rights

COUNTRY ANALYSIS

STRATEGIC MARKETING DIRECTION

Marketing Scope Premium full-service restaurantFeatures both American and Chinese foodsOperates in big cities

Marketing GoalCreates & develops brand awareness & reputationExpands all over China

Marketing ObjectivesRevenues: $2.2bil / 20%

growth rate in 3 yearsExpands from 3 to 15

restaurants in 3 yearsEarns 5% of the market

share in 5 yearsEnhances relationship with

government, suppliers, etc.Develops new menu items

STRATEGIC MARKETING DIRECTION

Target customerChinese men & women: age 20 - 55, upper-

middle income, well-educated, live in big cities

Western foreigners: expatriates & tourists

Target competitorsBeijing Little Potato Catering ManagementChongqing Taoranju Catering Culture Zhongshan Seaport Catering Group China Quanjude Inner Mongolia Little Sheep Catering Chain

OVERALL STRATEGIC APPROACH

Branding and positioning statementUp-scale, casual dining restaurant chain that features Western and Chinese foods.

Sales and Channel Strategy The restaurantsWebsite

OVERALL STRATEGIC APPROACH

Market Entry/Expansion Strategy Wholly - owned subsidiaryNo licensingPartner with suppliers

Core Marketing Strategy Word-of-mouth strategy

Buzz, Viral, Social Media, Blog, etc.

OVERALL STRATEGIC APPROACH

Risk AnalysisCultural differenceIneffective marketing communication Intense competitionRisk management

Being aware of threatsUnderstand and respond quickly Differentiation

OVERALL STRATEGIC APPROACH

MARKETING MIX

Product localization•Cut down items in menu•Add Chinese food •Reduce dish size•Support chefs to join culinary contest

MARKETING MIX

Premium pricing 1. Find the highest price target customers could

afford2. Markup on sales > 300%3. Treat branch managers as salespeople4. Evaluate work in progress monthly and annually

MARKETING MIXSelective distributions• Traffic malls• Nice scenery: Top roof or corner

Quality supply chain• Material Requirement Planning (MRP) to minimize

delay• Just-In-Time (JIT) system to keep food fresh • Qualified local suppliers and local distributors to

reduce costs

IMCCreate awareness of value propositions

1. Use exciting message 2. Execute creative media

• Wrap the restaurant

• Distribute invitation cards

• Spread WOM

IMC

Build brand interest and desire

1. Establish sophisticated brand equity

2. Apply PR Marketing• Gift cards for Chinese

icons • Editorial advertising • Renren and Weibo

IMC

Remind brand values1. Implement loyalty programs and CRM

• Free sampling on birthday • Premium gifts• Member card

2. Focus on interactive marketing• Official website• Mobile phone application

3. Launch CSR plans• Harvest program• Event sponsorships

CONTINGENCY PLAN

Best caseGrowth rate and revenues: more than

expectedExpand to other cities/provinces

Second caseGrowth rate and revenues: lower than

expectedDon’t open new restaurants – Keep 3

restaurantsOR slow down expansion rate

Worst caseFail in Chinese marketExit Chinese marketGo to other countries : ex. Australia

CONCLUSION

China is a potential marketCheesecake Factory is developing fast & needs to

expand Expand to China

Earning: $64 mil. USD annual revenues & $13 mil. USD annual net income in the 3rd year

Required budget for 1st year$15 million

REFERENCE

Berggren, D. (2012, February). Enter the dragon – investment risks in China. Retrieved from http://www.tradingfloor.com/China's marketing challenges. (2011, April). Retrieved from http://www.bizcomm unity.comCheesecake Factory. (n.d.). 2011 annual report. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comCheesecake Factory. (2006, March). Code of Ethics and Code of Business Conduct. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comCheesecake Factory official website. Retrieved May 30, 2012 from http://www.thecheesecakefactory.comHoenig, J. (2007). Wise companies prepare for—and minimize their exposure to— risks when investing in China. Retrieved from https://www.chinabusiness review.comMiller, K. (2009). Organizational communication: Approaches and processes. (5th ed.). Wadsworth Cengage Learning. Boston.

REFERENCEOneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource company summary report. Retrieved from OneSource database.OneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource corporate overview report. Retrieved from OneSource database.The Cheesecake Factory Incorporated (NASDAQ: CAKE). (2012, May 29). Business Wire. Calabasas Hills, CA. Tan, F. (2011, June). Chinese now spend 41% of their time online on social networks in lieu of news sites. Retrieved from http://thenextweb.com/asia/Xia, Z. (2012, January). Chinese regulator imposes stricter rules on TV programming and advertising. Retrieved from http://www.screendigest.com/news/