Beginning with the history of Oldtown white Coffee, it started in the year 1999. Oldtown aim is to deliver high quality of white coffee to the Malaysian household as well as the food service industry. Blend 3 in 1 instant coffee is formulated by Mr. Goh Ching Mun the co-founders and Mr. Tan Say Yap the executive directors. The growth of the Oldtown were helped by the co-founders with the provision of Mr. Lee Siew Heng who is holding the position of Managing director of the company. The role that he was responsible was implementing the company vision, development and strategy. Oldtown currently exports beverages to 17 markets globally (Oldtown AR, 2017).
In this assignment, I had choose China as my host country. I will be doing research on analyzing the global marketing strategies that Oldtown adopted in China.
3.0 Deeplist analysis.
Age: 0-14 years: 17.15% 15-24 years: 12.78%
25-54 years: 48.51%
55-64 years: 10.75%
65 years above : 10.81% (CIA World Factbook, 2018)
Urban population: 59.3 % of total population (Worldometers, 2018).
In china, 32% of Chinese millennials earn average below 700 Rmb per month. (Statista, 2018). Statistics is shown in appendix 1. 301625154305Environmental
In China, water pollution is the country worst environmental issue.
China have banned few websites such as Facebook, Instagram, YouTube, Twitter and etc.
China has offered tax breaks for foreign companies (South China Morning post, 2017).
Poverty has largely decreased in China.
In China inflation rate is averaged about 5.26 percent from the year 1986 until 2018 (Trading economics, 2018).
GDP in China was 11199.15 billion US dollars in 2016 (Trading economics, 2018). Second largest economy.
In 2017, disposable income reached 36,396 Yuan in urban and 13,432 Yuan in rural respectively. Up 6.5 percent and 7.3 percent in real terms after deducting price factors (National Bureau of Statistics, 2017). 30797561595Legal
Tariffs and regulations- value added tax (VAT) which is subject to 13% to 17% dependent on the products category.
China is one of the biggest coffee consumers in the world.
Population among youngsters are influenced by the western culture.
China history shows that it is a tea drinker country. 434975100965Technology
In 2017, 36.4% from the age 25-34 purchases their food through online. (Statista, 2017).
China stores are now using pay applications such as Alipay and WeChat Pay. (CNBC, 2017).
3.2 Porter 5 forces.
236220107315 Competitive rivalry (High)
00 Competitive rivalry (High)
Starbucks is of the main competitor of Oldtown white coffee. This is because Starbucks has more than 3000 outlets in China. (CNBC, 2017).
Dio coffee has captured an advantage over Oldtown white coffee as it serves variety of traditional Chinese cuisines.
254000112395Threat of substitutes (Substantial) substantial)
00Threat of substitutes (Substantial) substantial)
China is traditionally a tea consuming country.
There are many fast food restaurants that offers similar product as Oldtown white coffee such as Mcd, KFC and pizza hut which offers coffee with low relatively low price.
Local Chinese café which are offering Chinese cuisines together with coffee is considered to be a major threat.
7429576200Bargaining powers of suppliers (moderate)
00Bargaining powers of suppliers (moderate)
China raw material price has increased sharply.
23622078105Bargaining power of buyers (High)
00Bargaining power of buyers (High)
Bargaining power of buyers has increased over the few years after multinational food company has entered such as Starbucks, costa coffee, McDonald, kfc and etc.
Since local coffee shops in china has increase in competitive, it gives more power to the buyers.
31686593345Threat for new entrants (moderate)
00Threat for new entrants (moderate)
3.3 Hofstede cultural dimension
Malaysia scores 100 on power distance.
Respect and also humble determines the value high power distance.
Ethically, employees give their respect to the managers.
China scores 80 on power distance.
Every individuals who is working in a company will follow the company’s regulation and work which is set by the owner.
Rank is very important in business relationship. In that, individuals have to know their rank when communication with the superiors.
Malaysia scores 26 on individualism.
Malaysia is on the collectivist side as it accentuates of the benefits of working in group rather then individual gain.
It concedes three races which is Malay, Chinese and Indian in working together in developing Malaysia economy.
China scores 20 on individualism.
China seems to be on the collectivism-end. People are interested in group rather then themselves (Hofstede insights).
The culture which is influenced by the administration of Mao in encouraging collectivity in achieving national goals as a strength.
Malaysia scores 50 on masculinity.
China scores 66 on masculinity.
Masculinity are higher then feminine as Individuals are more motivated in reaching success.
Chinese individual’s priority is work where they will sacrifice their family and leisure time as well (Hofstede insights).
Chinese students cares about scoring high marks in exam and ranking which is their main principles to accomplish success or not (Hofstede insights).
Malaysia scores 36 on uncertainty avoidance.
Individuals in Malaysia are less anxious by the uncertainty and ambiguity in having a better tolerance with a diversity of options.
This is the way that Malaysian individuals’ deals with uncertainties which they take it easy as well let it to come (PU, 2010). 206375102870China
China score 30 on uncertainty avoidance.
center9525Long term orientation
Long term orientation
Malaysia scores 41 on Long term orientation.
Normative culture (Hofstede Insights).
Exhibition for great respects in tradition and emphasis on achieving fast results (Hofstede Insights).
Desire in maintaining time-honored traditions and also norms though viewing societal changes with suspicion (Hofstede Insights).
China scores 87 on Long term orientation.
It’s a pragmatic culture (Hofstede Insights).
China prefers a long term developments as well indirect of enforcement strategies.
Before making any decisions, the Chinese partners wants to gain trust because they want to build a long term relationship which it will take a long time in closing up a business deal.
For Long-term orientation, it is apparent that the Chinese culture is very much committed in loyalty to as well respect
Regarding Long-Term Orientation (LTO) it is manifest that Chinese culture is much more committed loyalty to and respect for traditional business strategies than the United States (29). This shows the highest ranking factor worldwide in long-term avoidance (118). Chinese people never want to lose face and are short-term oriented. The United States, on contrast, is a long-term planning country in which thrift, perseverance and persistence are valued to deal with. For instance, to deal with economic changes or with adaptation to new situations
With the very low score of 14, Moroccan culture is clearly normative. People in such societies have a relatively small propensity to save for the future, and a focus on achieving quick results.
Although Moroccan prefer working with past acquaintances, they do not emphasize at the beginning on establishing a long term business relationship.
However, in Chinese culture long-term orientation is a crucial part in carrying on a successful business deal, and only time can help establish trust in business relationships.
Also, considering that Chinese have the highest saving rate compared to the rest of the world (50% of their GDP) it shows how its people are focused on long term results; as the Japanese say “????” ( Ippoippo: step by step) they move toward their goals.3.4 Marketing strategies
4p’s, segmentation and consumer behaviour and degree of adaptation.
Oldtown have different types of products which will suite all different coffee lovers.
They have 3 in1 coffee as instant coffee grows popularity in China.
Oldtown uses market penetration pricing for their products to attract middle income and below.
They also are using product bundle pricing where they combine several products together and offer in a cheaper price.
Oldtown have promotions on their products during the festive season with good deals (Oldtown AR, 2017).
Oldtown white coffee has currently only 4 outlets at China which are in Guangzhou, Guagdong and Shenzhen. The four outlets are located at shopping mall, street road and corporate headquarter (Oldtown).
Oldtown is also selling their products almost on 100 online platforms at China.
13970072390Segmentation and consumer behaviour
00Segmentation and consumer behaviour
Targeting new generation of millennials and Gen Z consumers (Oldtown AR, 2017).
8382086360Degree of adaptation
00Degree of adaptation
Product packaging is written in Chinese language.
Focused on e-commerce as consumers in China prefers virtual stores.
Oldtown follows different standard technique marketing strategies in Malaysia but in China, it has adapted to the global localization which is using the polycentric orientation influenced by the local culture and also market conditions in gaining Chinese consumers confidence and trust.
Oldtown have been present since 2014 in China’s main platforms and reported to been doing very well on the key supermarket chains and also online retailers, for instance, jd.com and t-mall. (Oldtown AR, 2017.) They are also presently supported well at almost 100 online major platforms in China. A website which uses the native language might increase the consumers’ confidence in purchasing their products. This builds a connection between Oldtown and the consumers in China. Rendering to t-mall, Oldtown online flagship stores in t-mall was ranked as No.3 as in June 2016 based on coffee mix powder sales (DBS group research, 2017).
China is recognized as a tea traditional country. In that, they have come up with a white milk tea which will attract more consumers because tea consumers in China are more then coffee and expect to increase more in coming years (Statista, 2018). Moreover, Oldtown had launched the mocha flavour in China in 2017 in aiming to target the young consumers and individuals that do not drink coffee (minime insights, 2018).
The company targeted young consumers in China and it predicted that the changing lifestyle of young people in the country would increase their demand for coffee.