IB Business Management Internal Assessment (Higher Level)
Research Proposal
Research Question: How can Blends maximize brand awareness to
reach long-term profitability?
Candidate Number: hlh882
(Word Count: 493)
Research Question
How can Blends maximize brand awareness to reach long-term profitability?
Rationale
Hennessy is a world renown cognac distiller. The group’s main stream of revenue has been
physical retailing of their alcoholic drinks. However, the new Blends bar, launched in 2020,
will be a radical shift in the company’s business model. Being a new concept in a disjointed
market, there are many factors such as competitors, product promotion and bar ambience that
must be taken into account for a successful launching. Despite being in a prime location that
attracts a lot of foot traffic, there is still low-occupancy rate during weekdays. Moreover, the
large overheads such as rent pose burdens to profitability. To analyze the bars current
position, I will use qualitative and quantitative tools.
Theoretical Framework
In this research project, I will create 3 strategies for increasing brand awareness and
profitability for Blends. The production competition map and fishbone will allow further
analysis of the current issues and competitors. The Lewin’s Force Field will allow me to
weigh the pros and cons of the possible suggestions.
Key Areas of the Syllabus
1.5 External Environment
1.6 Growth and Evolution
1.7 Organization Planning tools
3.2 Cost and Revenues
4.3 Sales Forecast
4.4 Market Research
4.5 The Four P’s
5.4 Location
Methodology
Primary Research:
-
Overview of Blends monthly revenue report
Customer survey: A survey of 20 people by going to the bar on two separate dates
2 interviews with Hennessy executives (Marketing VP and China President)
Secondary Research:
-
Articles about rent prices in shanghai, competing bars and population by district
Anticipated Difficulties:
Anticipated Difficulties
The interview questions may be framed in a
way that demands a certain answer.
The interviewee may have biased opinions
when discussing information.
Having closed-ended questions in Survey
may limit discussion.
Customer reluctance to survey participation.
Possible Solutions
Have the questions be proofread by my
advisor.
Critically analyze the response. Ask
questions that challenge interviewees
response.
Do not stick to the script. Ask follow-up
questions related to customer experience.
Maintaining a friendly tone. Keep the
survey in a conversation format.
Timeline and Action Plan
Date
September 28th
Action
Finish research proposal
October 1st
Interview the Hennessy China
President
Request additional
marketing/finance information
October 4th
October 12th
October 20th
November 15th
Conduct secondary research
(wages, competitors, rent)
Use data to make evaluation of
the Bar
Conduct a survey analysis of
customers
November 25th
November 30th
Write Introduction
Finalize IA + First draft
December 5th
Interview the China Hennessy
VP
Make final adjustments to IA
December 10th
December 28th
January 17th
Modification
Started writing proposal in
August
Wasn’t given a balance sheet or
cash-flow statement, but granted
a monthly-performance
spreadsheet when available
Able to complete the research
on October 8th
Expected to be through WeChat,
but became 1-to-1 survey at
Blends
First draft came on 24th
November
Postponed to Dec 10th due to
personal constraints
Calculated percentages from
finance and add the summarized
data into IA
Final Submission
IB Business Management Internal Assessment (Higher Level)
Written Report
Research Question: How can Blends maximize brand awareness to
reach long-term profitability?
Candidate Number: hlh882
(Word Count: 1997)
Acknowledgements
I would like to thank the following people for providing me with the information necessary in
completing this paper:
The Hennessy staff for providing me with information regarding the bar’s current position
through the interviews and certain financial information.
My advisor for supporting me through the writing process.
Letter of Approval:
Table of contents
Executive Summary………..…………………………………………………….…..Page 8
Introduction……………………….………………………………………….……....Page 9
Main Results and Findings......……………………………..………….……………Page 10
Analysis and Discussion.……………….…………………………………....….…..Page 12
.
Conclusion and Suggestions……...………..………………………….………..…...Page 14
Bibliography……...….…………..…………..……………………………...…..…..Page 18
Appendices..…………….…..……...………………..…………………….…..…....Page 28
Executive Summary
With the mission of raising brand awareness, Blends is project by Hennessy that has three
main objectives: generate publicity for Hennessy, gain insight into consumers and lastly,
generate a profit. Since this is a relatively high-risk market-development strategy, I was led to
the research question: How can Blends maximize brand awareness to reach long-term
profitability?
The paper includes analysis of primary and secondary research. Primary research was based
on a survey, an interview with the marketing VP the president of Hennessy China which are
available in appendices. Secondary reach was based on online articles.
Through the Fishbone diagram and the product competition chart, it was seen that brand
awareness was lacking compared to competitors and the prominent issues were government
regulation (due to location) and external threats from existing customer loyalty to other bars.
In proposing suggestions, I used the Lewin’s force field on 3 different decisions to see which
one was optimal. In the end, it became clear that launching another bar wouldn’t be costefficient and too time-consuming. On the other hand, Blends could take the combined
approach of catering the bar for corporate groups and hosting more themed events to help
long-term profitability and brand awareness.
Introduction
Moet Hennessy (MH) is a constituent of the group LVMH that specializes in wine and spirits.
Amidst the 21st century, MH’s business strategy has taken a radical turn. Rather than focusing
solely on promoting the product, many of the recent marketing campaigns are based on
market-development strategies such as the “Virtual DJ” experience launched in March of
2019.
Blends by Hennessy is the first bar launched by the MH group which, aims to maximize
consumer experience whilst raising brand awareness. The bar, situated in one of China’s most
iconic areas (the bund), will offer a range of beverages from innovative cocktails to classic
drinks. It will also serve as the starting spot for any new product launches creating a unique
selling point for the brand. Being a market penetration strategy, there are external threats that
could halt the success of the business. Factors such as high overheads, strenuous competition
and government legislation will affect Blends’s ability to generate stable profits and brand
awareness.
Whilst the bar is more focused on promoting brand awareness rather than profit generation,
the long-term goal for the bar would still be to maintain stable cash-flow levels (Appendix 1).
This then led me to my research questions:
How can Blends maximize brand awareness to reach long-term profitability?
Methodology Employed:
Primary Research
• Survey of 20 Blends Customers
• Financial Information (Revenue)
Interviews with Hennessy China Staff:
• Marketing Vice President, Mr. Antoine Varlet
• President, Mr. Benny Ng
Secondary Research
Online Articles:
• Rent prices
• Competing Bars
Main Results and Findings
Interview with President of Hennessy China post-launch
1. There are 3 separate revenue streams. The products on display, the alcoholic drinks
and the food
2. Price will not be a basis for competing; the bar is intended for higher-income earners.
3. The company has high operating costs and anticipates a negative cash flow for 18
months
4. Unique selling points include purchases of name-engraved bottles and cocktails
tailored to the customers mood
5. Largest external threat are the neighboring restaurants who all have high customer
loyalty
6. Government restrictions create limited window promotion strategies for Blends
7. Chris Xi, a renowned mixologist, is another USP of the Blends bar
8. The bar will have a direct-to-consumer approach (Distribution Channel)
Survey analysis of 20 Blends customers
1. The main customer demographics are Chinese males aged 20-35
2. The relatively high price was a discouragement to only 20% of customers – indicative
of a high-income customer group.
3. No single cocktail was the customer “favourite”, varied between each individual
4. The location was cited as biggest hinderance to 20-35 age range target market
5. The relaxing ambience and atmosphere were cited by 6 customers
6. Customers of age range 35-50 are more interested in wine and whisky but 20-35 age
range customers came more frequently
7. Most customers reside in the Jing-An area or French concession
Interview with Hennessy China VP post-launch
1. The Bund is less of a cocktail bar location than Jing-An but targets more high-end
consumers
2. There is great importance on increasing foot traffic
3. Customer experience has been highly positive on Dian Ping (4.92) due to staff
interactions and beverage choice
4. Most customers are unaware it’s Hennessy until coming to Blends so it builds brand
awareness for both Blends and Hennessy
5. Revenue streams are more different than anticipated: events were a large contributor
6. Most of the traffic happened late night (8:30 PM to 4:00 AM) and was unexpected
7. The customer demographic shifted slightly – more “younger audience” aged 20-35
than expected but still prominent 35-60 years old demographic.
8. WeChat Promotional events were key contributor to publicity and attracting
customers.
Finance (See Appendix 3 and 4):
Comparative Monthly Performance (November to December):
1.
2.
3.
4.
5.
Net Revenue: 65% Revenue Increase (From ¥451080 to ¥746659)
Total Traffic Increase: 230% Traffic Increase (From 403 to 1331 people)
There was a 7% increase in customers who came during Lunch and High Tea
Blends managed to meet 7 of their targets in December compared to 0 in November
Even Privatization became largest revenue stream in December as it accounted for
44.4% of revenue
6. Food accounted for a similar proportion of revenue in both months (9.3% vs. 9.4%)
7. During daytime and weekday, the bar is not operating at full occupation rate
8. One valuable component to the revenue increase was the Retail aspect that accounted
for around 14% in December
Analysis and Discussion
From the fishbone, we find that one of the biggest obstacles in the way of Blends to achieve a
high brand awareness are competitors. The bund area already has a large number of bars with
high customer loyalty. Therefore, Blends must either attain customers from their own
alcohol-drinking customers or manage to acquire a share of the current market. Moreover, the
large number of bars means the prices in the area will be quite competitive (Zhang). From the
interview, it was found that Blends will nonetheless maintain high prices to establish a strong
brand image.
Another concern for Blends is the legislation and government regulation. Being located on a
famous landmark (appendix 1), there are restrictions in terms of window advertising, sound
and architecture. Moreover, being a new bar, they have not reached sufficient economies of
scale like neighboring bars and these incurred costs could be detrimental to long-term
survival. Therefore, Blends will need to provide a unique product offering to differentiate
from competitors whilst simultaneously abiding with the strict regulations.
Product Positioning Map
High brand awareness
High price
Low Price
Low brand awareness
Shown in the product positioning map, most of the bars in similar locations are lower priced
than Blends (TripAdvisor). Mint was opened in 2004 and Bar Rouge in 2003 and as a result,
they have amassed a greater customer loyalty than Blends who have only been opened for a
few months. With Bar Rouge and Mint having bars in other countries such as Switzerland
and England, they can enjoy technical economies of scale that Blends doesn’t have. However,
as pointed in the post-launch interview (Appendix 2), Blends is offering a different customer
experience and specifically focuses on cocktails. Drinks and Co is a bar in Jing-An and
attracts a different customer group and hold advantage in terms of lower rent costs (F&B
Spaces). However, they cater specifically to Pernod-Ricard customers without emphasis on
expanding current customer demographic (Appendix 2). Therefore, Blends’s unique product
offering helps justify the higher prices (Blends).
Conclusion and Suggestions:
Suggestion 1: Opening another bar within the Jing-An area
Whilst the current bar is in a prime location, it only caters to a segment of high-income
earners in Shanghai (Appendix 2). Since the bars main objective is to raise brand awareness,
more publicity could be granted by a 2nd flagship venue. In terms of population density, JingAn is the third most dense district in Shanghai (Shanghai Municipality). In addition, having
two bars gives customers more outlets to accessing the products being sold. As most of the
current customers reside in Jing-An (Appendix 3), this second bar would increase
convenience for existing customers and also target another customer demographic thus
increasing brand awareness and potentially lead to long term profitability.
Shown from the Lewin’s, opening another bar in the Jing-An has more limitations than
benefits. The biggest limitation is the high operating costs that Blends would incur from a
second bar especially since the break-even position for their first bar is only anticipated in 18
months (Appendix 1). Being a more luxurious cognac distiller, opening in a location with
more affordable and conventional bars could negatively affect their image as a low-end bar
(Munish). Even if, in the long term, Blends could eventually start generating a profit through
having two separate bars, the initial and operating costs make this decision too risky.
Suggestion 2: Hosting themed events with mixologists and DJ’s
Hosting events, both on weekends and weekdays, would incentivize existing customers to
come on a more regular basis, generate publicity and tackle the issue of not meeting full
capacity during non-peak hours. This would also enhance customer experience and shift the
brand image which Antoine noted as a priority. These events could include inviting famous
DJ’s and mixologists or activities such as “Monday Mixology”. This would also differentiate
them from neighboring bars and grant competitive advantage over Drinks and Co.
The Lewin’s suggests hosting more frequent events would be considered beneficial for
Blends. While there are variable costs associated with this, these costs would be
comparatively lower than the costs of opening a new bar. Moreover, if this initiative
generates high brand awareness and increases Blends’s market share, these costs would be
outweighed by greater long-term profitability.
Suggestion 3: Cater the bar for corporate groups
From the finances, it was found that event privatization contributed to approximately 30% of
revenue in both months – higher than any other revenue stream. Moreover, the interview with
Antoine concluded that this wasn’t initially anticipated and that the current bar wasn’t
specifically tailored for commercial events. Brands like “Sephora” have privatized during
special events due to its luxurious and cozy setting (Appendix 2). Large corporations are
relatively price inelastic as they have large budgets so increases the prices for this
demographic should increase revenue. As a result, catering the bar to corporate groups by
expanding the bars size or changing the atmosphere could help increase revenue.
From the Lewin’s, we find that changing the current bars atmosphere and size wouldn’t be
favorable in its current stage. This is due to high opportunity cost of renovating when the bar
could be operating. On the bund, current rent is already high and increasing the bars size
would mean further costs in terms of furnishing the extra space. However, while the force
field noted the idea as being unfavorable, there are certain factors to consider. Since it doesn’t
predict future returns accurately, the return on this investment could be high and make it a
reasonable decision. Moreover, companies who privatize the bar have large budgets and it
already made up a large part of the revenue in the past (appendix 4). Lastly, since most
corporate groups come on weekdays, it wouldn’t affect the current 20-35 customer group
who usually come on weekends.
Conclusion:
Based on the above strategies and the respective force fields, suggestion 1 of opening a bar
would be unfeasible due to its high costs and high-risk. On the other hand, it is advised for
Blends to pursue suggestion 2 of increasing the number of promotional events at Blends.
Suggestion 2 would help with the brand awareness and attract customer traffic. From the
interview with Antoine, generating foot traffic was listed as a “priority” especially in the
initial stages of the product life cycle. However, if they do go with this, one limitation is that
it could affect people’s overall perception of the bar.
Suggestion 3 could also help in maintaining profitability in the long-run and complement
suggestion 2. Moreover, from the financial information, the privatization from companies
accounted for around 34% and 44% of revenue in November and December respectively.
However, the renovation would mean large initial funding and opportunity cost of not
operating and lost potential revenue.
Therefore, in terms of implementing the suggestions, it would be best to start immediately
with suggestion 2 as this would help amass greater brand awareness. After 6-8 months (past
the introductory phase of product life cycle), implementing suggestion 3 with an anticipated
renovation time of 1 month is recommended.
In terms of the tools, the Lewin’s force field is subjective due to the fact that it is interpreted
in different ways depending on who constructs it. Moreover, these remain high-risk decisions
and the company may want to use other business tools before making such a decision.
If I were to redo the IA, I would gather a greater survey sample group to obtain broader
trends about customer demographics. Moreover, I would try and obtain more in-depth
financial information. However, as it is a new bar and Hennessy is a large multinational, I
couldn’t access cash-flow statements and balance sheets.
Bibliography
“BLENDS BY HENNESSY.” Bund18, Bund18, www.bund18.com/fine-dining-andentertainment/blends-by-hennessy/.
“F&B Spaces.” SmartShanghai, www.smartshanghai.com/properties/fb-spaces/.
Munish, Mukul. “5 Most Exclusive Shanghai Areas for Buying Luxury Properties.” South
China Morning Post, 23 Feb. 2018, www.scmp.com/magazines/style/newstrends/article/2134291/5-most-exclusive-shanghai-areas-buying-luxury-properties.
“Shanghai Municipality: Population & Density by Administrative District: 1998.” Shanghai
Municipality: Population, Area & Density by Administrative District: 1998, Wendell
Cox Consultancy, demographia.com/db-shanghaiward.htm.
Zhang, Mia. “Are Spirits the Next Superstar for China's Drinking Culture?” Spirits Selection,
16 July 2019, spiritsselection.com/en/are-spirits-the-next-superstar-for-chinas-drinkingculture/.
Appendices
Appendix 1: Interview with Hennessy China President
What is the main goal of Blends? Raise brand awareness or generate profit?
One of the goals is to have an outlet where we can have consumer experience shared with
consumers of Hennessy. Until now, no directly owned retail outlets where we can implement
consumer experience, activation or any digital programs that thew consumers of Hennessy
can experiences. The second goal is to build a flagship. The first flagship bar and retail outlet
will enhance the brand awareness of the brand. The reason to choose is shanghai is because
most of our consumers will come to Shanghai sooner or later and there was an opportunity in
a high-foot traffic area. Inside the outlet, there is a cocktail bar where all cocktails using our
products will be showcased. We will have mixologists preparing special cocktails and special
drinks using the Hennessy products. We hope that when the consumers come to the bar, they
can experience our product and it is not only a drink, but also a journey for them.
At the same time, we will also showcase the product on the windows so any interested
consumers can buy the product and they can ship anywhere to China.
There will be a lot of digital marketing to ensure they get regular communications of all the
events in Shanghai and the main Hennessy cities in Shanghai. It is a tour to do a lot of PR and
marketing for the brand. Lastly, Blends remains a business with the intent of giving Hennessy
another outlet for raising revenue and hoping to be a profitable business.
What is the anticipated target market?
The target market is for anyone who knows about the brand or are yet to know about the
brand and want to get to know the brand. It is around the 22-45 age group. But it is open to
anyone within that rage. We will also organize visits from all over China for consumers who
are based in other provinces and it will become “a place to be” when they come to Shanghai.
Communication through WeChat and other communication platforms in China. Private
individuals, VIP Consumers, people who have been purchasing for a very long time and
people who are distributors of Hennessy in other main cities are also part of the customer
market.
How many people are employed at Blends?
They can accommodate around 45 customers at one time. There will be around 10 staff
working on a permanent basis. 12-15 staff members
Is Blends open every day of the week?
It’s been launched just recently and open every day from 10 in the morning to 1-2 in the
morning. During the day, there will be coffee, canepe and afternoon tea as well as cocktails
for those who want it. There will also be digital programs and light supper, light food for
them to drink with the coffee. The main focus will be in the afternoon during happy hour as
well as throughout the night.
Which days are the busiest? Is the (customers on weekend): (customers on weekday)
ratio balanced?
Right now, they don’t know for sure. Since in building there are restaurants and the busiest
are usually from Thursday to Saturday but unlike the restaurants in the building, it is on
ground street level, so we expect to attract curious and walk by customers. There will also be
busy every day and people cuing to get in as the capacity is rather small. When people cue
outside, it generates good buzz for the venue and thus becomes advertising for the venue.
Overtime, we hope this will become the top of the town for people and become a “to do”
visit. A symbol of Hennessy within China. Most of the customers who will come will be
Chinese and we will target Chinese consumers.
Does Blends close during seasonal holidays?
It will be open 7 days a week since it is situated in a touristic area.
What are the main costs at Blends (fixed and variable)? Rent?
The rent is expensive, but it is also the symbol of Shanghai -> From the provinces, they all
know the bund and it is a magical area for them. Also, there is a lot of foot traffic and
restaurants on the bund. Expect people after or before the diner to come for a drink.
Secondly, we had an opportunity because the landlord offered us a place, and this is a first
bar we opened in the whole world. First of many bars. A lot of interaction with the
consumers. Learning about behavior, background and later tailor programs for them.
What are the main modes of advertising? Which platforms?
It is on Bund 18, there is a corner window so the logo will be showcased. Opposite the bund,
on Pudong area managed to secure outside LED with the Blends advertising on it. But most
will be through social media and digital.
What is the intended target market? How does this affect interior decor?
First, the whole design of the bar was done by an architect from Paris and a very well-known
architect who has been working with LVMH for a long time. Designing all the factory outlets
for Dior, LV etc… Therefore, the inside of the bar has a video mapping technology where the
lighting and atmosphere evolves according to the time of day. For example, in the evening
after 7 the lighting is much dimmer and the music is different to create a new atmosphere for
them.
How is social media used for promoting Blends?
There will be a lot of digital marketing to ensure they get regular communications of all the
events in Shanghai and the main Hennessy cities in Shanghai. It is a tour to do a lot of PR and
marketing for the brand.
What are the main alcoholic drinks? Are there any drinks from rivaling PernodRicard?
The idea is that whenever there is a launched product, it will be in this place to be purchases
before it goes public in the dish bushing network. For product launch, this will be the first
place. Even before it is available in Shops. There are also special products that are only sold
here and not elsewhere. There will also be tailor made personalization like laser graving and
special techniques to ensure the purchased product is unique and cannot be found elsewhere.
This will increase consumer desirability to visit this place. There will also be cocktails using
different products from the group. Using professional mixologist who has created many
cocktail using outside and variates the drinks according to their mood. That way they will be
surprised by the drink the mixologist has prepared.
Apart from alcoholic beverages, what are other streams of revenue?
Main area is the product on display, this will be the main revenue streams. Second revenue
streams will be the cocktails, champagne, wine and Hennessy neat -> Not only cocktail. Food
is third revenue stream -> Light food and canape + Coffee. The products themselves will
have the greatest profit margin and then the cocktails as there are tailor made cocktails. One
of the cocktails is 8000 RMB and only the very wealthy consumers will buy.
Are the bartender’s world renown? How does this affect promotion?
He is famous within China, famous within the mixologist circle. This increased their
promotion.
In the future, is there idea of expanding and having multiple bars or having only a
single venue?
This is the first experience and will learn as much as possible towards the brand. Using this
consumer insight, we will find other places like Chengdu, Shenzhen, Beijing like retail shop
and bar and this will depend on the objectives we want for the next project.
How will the products differentiate?
They can purchase products from the group in addition to Hennessy, but all the brands will
belong to the group. When doing cocktails, we use other alcohol which, do not belong to our
group. That could be used. We must remain open-minded -> To be innovative, we must use
different alcohol and as long as it is from our place, it should be fine.
Are the drinks offered classic or there any drinks unique to this particular bar (e.g. cocktails)?
Do the restaurants situated above (in the same building) compliment the market size?
Most consumers are for the restaurants upstairs in the building. There are some walking
customers, but they will not be the target customers.
Main customers are those who go restaurants and second through social media advertising.
Key opinion leaders and key consumers for them to come visit the place. There will be a
group of core consumers who come on a regular basis. The ultimate goal is to have barhopping customers -> large and growing market in China. We want Blends to be one of those
bars so they can take from this particular market.
Word of mouth will also be an essential key to the marketing strategy.
What is the estimated cash flow position in the next 6 months of Blends?
The capital expenditure, the project costs are very high.
The break-even is planned in 18 months and they will have negative cashflow for the next 18
months. The money is used for consumer advertising and building brand awareness. But,
consumer advertising is also an investment in itself and not easily valuate the value of. The
return on investment for building brand awareness. Capital expenditure which will be
depreciated in the long-term. The project costs, the architect, the designer, the furniture have
all contributed to the high-project costs.
How has legislation affected the opening of the bar?
The legislation and government was hard. There are things you cannot due since it is a
historical monument. Cannot change the outside aspect and there are a lot of restriction as to
what you can move and cannot move. It is selling food and alcohol so there are fire
regulations, alcohol licenses and licenses before obtaining. Opportunity cost was high
We must incorporate this into all the planning -> Have more long-term consequences
Operating costs: The rental, the staff -> Anything related to the bar
Any possible threats to the business?
Not attractive enough for consumers to come. Strengthen the marketing program and also
because in the building they also have their bars. Therefore, there are clear competitors in the
area -> Some may feel we are competing against them. Prices are not going to be lowered but
they will use innovative concepts and cocktails to attract the consumers
We studied the cocktail menu for the other restaurants upstairs.
How has digital marketing been implemented? How are the distribution channels?
At the bar, they will get to know the products, a lot of digital marketing for them to read.
There is a DJ table and the products showcased can be purchased as well as on the internet.
(No letter engravings w/ name on the bottle)
They can also order online through social media and shipped to them
Shanghai edition Hennessy e.g. Hennessy X.O.
Direct-to-consumer approach
Otherwise distributors/ecommerce who sell to consumers -> Indirect consumer distribution
Pay attention to the staff costs but not on the cocktail themselves
Appendix 2: Interview with Antoine
What is the main customer demographic? Has there been any changes since opening?
Or any surprises in the customers?
In the preparation phase, we targeted 2-3 main customers. For sure, the most important was to
target young Chinese who like to go out, party and love the cool new places. Going out a lot.
The demographics was 23-35 and essentially Partygoers.
Not surprised, but the more important for these retail spaces is to attract the traffic. One of the
surprises is that the bund dynamic is not as we thought it was. It’s not a surprise but that the
place itself it suits more the after-dinner party and coming for a drink and less about pure
mixology. Less about the cocktail bar.
What has been the customer feedback thus far? Positive? Are there any areas for
concern?
The lighting, the entrance and the ambience were main aspects that people enjoyed. Overall,
the score is 4.92 on Dian Ping. When you read the review, the biggest strength is the
customer experience. They treat the customers like the kings. That, from all the reviews, is
very important. The best asset is the quality of people and quality of drinks. One thing here is
that it is a high-quality experience.
How are the Competitors? Who are the current competitors?
Because of the issue of traffic, people are coming because its blends. For Pernod-Ricard, they
are attracting people who are already part of the bar. The space of Pernod-Ricard so they
aren’t really digging into a new customer group. The cocktail scene is very dynamic and there
is an improvement in the quality of the drinks. The quality was very average within PernodRicard.
Is the market saturated?
No Saturation because people are eager to see these things. The more you know cocktails and
even during the week, you have to queue. So there is a high demand for these kinds of things.
The difficult part is to find their own style.
The cocktail culture is something new. Something of the east. In Guangzhou and Beijing
there is but very nascent. It something that starts and good way to socialize differently. They
socialize in high energy clubs. They interact
Has the retail service where customers get engraved bottles been successful?
Some customers come and they see we are selling as well. Some VIP’s will buy a bottle when
there is a gift. When there are events, they want to buy a bottle. It is starting on the miniprogram and deliver to their places. The digital aspect of blends in interesting. They are
partnered with other distributors.
Any conflicts?
One of the issues is that the pricing is the most important. MHD has decided they wouldn’t
compete with the retailers. They don’t want to disrupt the prices and actually, its fairly inline
with the store at Blends. If they do it, it is in line with physical stores. There are specific
products for blends. If you buy VSOP, it comes in a packaging
What are the main challenges the Bar faces? Finance, lack of customers? (List as many)
We didn’t really know what the target was. It was not easy. After two months running, we are
80% of the target. The revenue is different. Not that much during noon to 6pm. Instead, most
people during night. Two peaks: 6:00 and 7:30 and the biggest peak which is after 8:30 pm
and 9:30 pm. A large part of the revenue is the private revenue. Design a bespoke format for
the bar was a great opportunity as well as Sephora last week and key opinion leaders who
privatized. They usually do this during the weekday and therefore, it helps to balance the
revenue a little more.
Why do you think these problems are recurring?
Having your own retail space. You try to correct and render it differently. The bar has cool
atmosphere when it is 10PM. Originally, wasn’t looking to do that. Now they are looking
how to optimize for this new design. The entrance, something open. They don’t want other
people changing the bar.
What will be changed with the current bar? Reinforcing on cocktails? Offering greater
variety?
Optimizing the physical space is very important. Also because it’s very important and
adapting the concept. In marketing, there is still a lot to be fixed: Attracting walk-in
customers. When it’s raining, with the Covid-19, so everyday, the team is agile to adapt.
Is there a lot of competition with neighboring bars?
The concept is not necessarily. Even if we think there is no competitors, you always have to
be careful. In terms of pricing, we are in line with what is done but there is no competing on
pricing. Targeting high-end consumers. We make sure it is consistent with the building.
What are some projects since the launching of this bar? Any expansion strategies?
Overall, the ambition is to have a bigger footprint in physical footprints. Everything is on.
The table. We still have a lot to learn and we are clearly ambitious and there are other cities
elsewhere. The format is to be open. Will it be a hotel, a bar or a physical boutique it is also
possible. The future is to be closer to the industry. You need to understand what works and
the right resources
What has been the most important aspect?
Showcasing Hennessy and using a mixology as an asset to showcase the brand. The second
objective was to generate revenue and the first bar that it owns. And the last objective was to
leverage the place and gain data on the people. Also emphasizing to have a mini program
makes that consumer data.
How is the brand recognition thus far?
There is not that much brand recognition. I think that people are coming because its blends
and then they discover that it’s also Hennessy. Blends is the great entry tool or sub-brand to
discover the brand. The kind of things like Blends help to build these social experiences. This
is also why they do it, it is not commodity.
Appendix 3: Survey Analysis Results
Sample 1:
Demographic: Chinese, Male, 43 years old, Living in the Jing-An district, Regular Drinker
Favorite drink was the Ao Yun wine (688RMB/glass). Comes mostly on weekends with
friends. Enjoys the cozy atmosphere and how the drinks can be tailored to your mood.
Overall, the atmosphere is what he enjoyed most. Occasionally purchases an engraved bottle
before leaving.
Sample 2:
Demographic: French, Male, 24 years old, Jing-An district, HuangPu district
Favorite drink was “Lost on the bund” (168RMB)
Enjoy coming to the bar for the unique cocktail offering and the substandard food offering.
Some of the cocktails and drinks are overpriced (example the royal blend cocktail
1688RMB), but others are well-justified by the quality
Sample 3:
Demographic: Chinese, Male, 43 years old, Regular Drinker, QingPu district
Favorite drink was the Hennessy X.O (3580RMB / bottle). Thought the drinks were not
excessively high priced. Sees it as a place for meeting business partners in a relaxed
environment. Comes mostly on weekdays and brings his own clients to the bar for business
meetings. Location is not an issue. Although suggests they open another bar elsewhere.
Sample 4:
Demographic: Chinese, Male, 44 years old, Regular Drinker, HongKou district
Favorite drink is the James Hennessy Cognac (1880RMB). Comes for business meeting
purposes. Introduced to the bar by a friend working at Hennessy China. Likes the layout and
design of the bar. Hasn’t tried the cocktail listing yet but would try in the future.
Sample 5:
Demographic: Chinese, Male, 24 years old, Regular Drinker, Xu Hui district
Comes on a frequent basis, around twice a week. Enjoys the drink variety and the emphasis
on having a large cocktail offering. Is a regular customer that comes frequently on weekends.
Sample 6:
Demographic: Chinese, Male, 38 years old, Occasional Drinker, Changing district
Comes of a frequent basis, also around twice a week
Came to the bar with a friend who had heard about there being a new bar.
When leaving, always purchases the name-engraved bottles. Also feels the staff are polite.
One dislike is the location. Has to account for transportation and on weekends, it is a trafficloaded area.
Sample 6:
Demographic: Singaporean, Male, 42 years old, Regular Drinker, Jing-An district
Enjoys coming with friends, especially on Saturdays. Drinks are quite affordable. Food is
adequate although not the main highlight for him. One disadvantage is the lack of people.
Less liveliness than adjacent bars like Bar Rouge.
Sample 7:
Demographic: Chinese, Male, 22 years old, Regular Drinker, Jing-An district
Heard about Blends from word-of-mouth. Favorite aspect is the creativity of the bar –
blending high-quality food with unique cocktails. Favorite drink is the “Royal Blend”
cocktail (1688RMB). Doesn’t regard food and beverages as overpriced. Enjoyed the design
and how it is located on a busy street.
Sample 8:
Demographic: Chinese, Male, 43 years old, Non-regular drinker, QingPu district
Comes for business discussions or other friends who come to the bar. Enjoys the low-alcohol
drinks with favorite being “The Hennessy berry” (78RMB).
One drawback is the lack of “bar-feeling” compared to Bar Rouge or other restaurant bars.
Sample 9:
Demographic: Italian, Male, 32 years old, Regular Drinker, Hongkou district
Heard about the business through word-of-mouth. Enjoyed the drink variety and unique
cocktail offering – design of bar was also very modern creating enjoyable atmosphere.
Favorite cocktail was “Down for Dawn” (128RMB). One drawback was the price tag on
some of the more “exclusive” cocktails.
Sample 10:
Demographic: Chinese, Male, 24 years old, Frequent drinker, Lujiazui area
Being a Hennessy distributor, heard about bar from Hennessy employees. Enjoys the concept
of the bar with “Hennessy VSOP luminous label”(1280 RMB) being favorite drink. When
with friends, will occasionally try the cocktails and frequently takes back “Hennessy Paradis”
(14520RMB) engraved bottle home. Feels the drinks are not overpriced but the food isn’t to
his liking.
Sample 11:
Demographic: Singaporean, Male, 29 years old, Regular Drinker, HongKou District
Comes to the bar with friends. Frequently comes on Saturdays.
Enjoys the ambience on Saturday nights – Larger crowd than usual and DJ booth.
Sample 12:
Demographic: French, Female, 22 years old, Occasional drinker, Jing-An district
Came from walking on the bund and going to another bar – interior decor was intriguing.
Enjoys the overall design and modern feeling. The turning DJ booth is a plus. Cocktails are
moderately expensive and wouldn’t purchase drinks over 300 RMB.
Proximity is an issue when there are other bars in French concession
Sample 13:
Demographic: American Chinese, Female, 23 years old, occasional drinker, QingPu district
Came across the bar when going to Bar Rouge – only comes on weekends. Cocktails are
high-quality, unique and creative. The bars design is modern and luxurious. Would only
come for having a drink with friends. Would recommend shrinking the cocktail list to reduce
customer choice.
Sample 14:
Demographic: Chinese, Male, 22 years old, regular drinker, Jing-An District
Came across through WeChat ad by Blends. Comes with friends and likes the cocktail
diversity. Has purchased a bottle on the way out in the past but mostly comes for the Bar’s
modern look and iconic location. Would want to see more people in the bar.
Sample 15:
Demographic: Chinese, Male, 33 years old, Regular Drinker, Changning district
Comes to the bar for business meetings with colleagues. Frequently drinks wine, in particular
the Cloudy Bay Sauvignon Blanc 2019 (150RMB/glass). Enjoys the location (bund) and the
cozy + modern atmosphere of the bar. He often purchases the bottle engravings when leaving
blends. Doesn’t often drink cocktails because they are too sweet. Would like to see more
events being hosted at the bar.
Sample 16:
Demographic: Chinese, Male, 33 years old, Occasional Drinker
Comes for business meetings. Enjoys the canape’s and snacks offered. When with colleagues,
enjoys Hennessy Paradis (950 RMB) or Hennessy X.O (238 RMB). Feels the location is
prime, not too far from his work (located in Xintiandi). Hasn’t tried the cocktails yet but
would like to try. Comes to the bar for the high-end and luxurious connotation. Enjoys the
atmosphere and overall modern feel of the bar. Wouldn’t want the bar to relocate as quite
satisfied with location.
Sample 17:
Demographic: Chinese, 24 years old, Female, Regular Drinker, HuangPu area
Comes for business meetings and on weekends with friends. Enjoys the extensive cocktail
selection with his favorite being “Trinidad Sour” (128RMB). When with friends, enjoys the
DJ turn-table and music selection. Feels the bar is somewhat small, would want a larger scale
bar with 50-60 people.
Sample 18:
Demographic: Chinese, Male, 26 years old, Occasional drinker
Comes to the bar on weekends only. Came across it through window advertising after eating
at Mr and Mrs Bund. Most frequently drinks the Bloody Mark cocktail (108 RMB). Far from
where he lives (QingPu Area). Has bought the bottle-engraved bottles twice.
Sample 19:
Demographic: Chinese, Female, 28 years old, Occasional Drinker, Jing-An district
Came across the bar through the window advertising. Likes the large cocktail variety and
creative listings. Rarely drinks liquor or wine. Far from other bars she frequently goes to that
are in the French concession. The ambience and overall mood from the bar are her main
reasons for going. Has only came twice, both were on Saturday’s.
Sample 20:
Demographic: Chinese, Female, 29 years old, Occasional Drinker, Jing-An District
Came across the bar through window advertising. Enjoys the cocktails – always takes the
Clover Club cocktail (108RMB) when coming. Live DJ, modern feel and luxurious bar
layout are the main reasons she comes.
Appendix 4: Blends Financial Report for November:
Appendix 5: Blends Financial Report for December