Marketing in China
Master Kong
Tang Lok Yiu (Yoyo)
11340690109
Yu Wai Sum (Monica)
11340690110
Content
Overview of Beverage
industry and Nonalcohol business
trend in the world
What makes Master
Kong’s consumer
happy and loyal
Consumer market
Overview of Beverage
industry and Nonalcohol business
trend in the China
What are the values
Master Kong created
for consumers?
SWOT analysis
Introduction of
Master Kong
Brand and product
Challenges in China
Competitors
Master Kong’s
Business model
Next Step in China
Overview of Beverage industry
and Non-alcohol business trend
in the world
Overview of Beverage industry and
Non-alcohol business trend in the
world
• People’s living pace is faster
• People are more stressful
• Development of economy leads to a better
living standard
People demand healthier functional drinks
Overview of Beverage industry and
Non-alcohol business trend in the
world
• Functional drinks grow globally in a fast rate
• Eg. Sport drinks, Energy drinks, calcium boost drinks,
• Carbonated drinks market
saturated
Expected decline in carbonated products
Overview of Beverage industry
and Non-alcohol business trend
in China
Overview of Beverage industry and
Non-alcohol business trend in China
Major categories of beverages in China
Carbonated Drinks
Eg. Coca-Cola
Tea Drinks
Eg. Master Kong Ice Tea
Fruit and Vegetable Juice
Eg. Huiyuan Juice
Bottled Water
Eg. Nongfu Spring
Overview of beverage market and
Non-alcohol business trend in China
• Main Direction : Health drinks
• “Eleventh Five-Year Plan” : focused on
adjusting the beverage product structure, and
reduced the proportion of carbonated
beverages
• Result ?
Overview of Beverage industry and
Non-alcohol business trend in China
• New categories of beverage entering the market
(Functional drink)
Eg. Sports drinks, energy drinks, vegetable protein
drinks
• China market : Continue to grow due to
demographic changes
What is Master Kong?
Who I am?
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Master Kong (Chinese :康師傅)
Taiwanese enterprise in China
Founded in 1991
Headquarters in Tianjin, China
Second most valued brand in China (TNS,2011)
(Logo of Master Kong)
Who I am?
• Specialize in the production and distribution of :
Instant Noodles
Beverages
Instant Food
Products
Who I am?
The Group is the market leader in instant noodles and readyto-drink (RTD) teas
Instant Noodle Market Share In China
2012, By Sales Value
Master Kong
28%
16%
Ready-to-drink Tea Market Share in
China 2012, By Sales Value
Master Kong
32%
56%
Uni-President
China
others
20%
48%
Uni-president
China
Others
Master Kong’s Competitors
Competitors
• Local Competitors
• Uni-President
- Together with Master Kong, the two brands’ market
share in the first and second-tier cities are almost 80%
- Uni-president’s fruit juice enjoyed a great popularity
in the market
Competitors
• Wong Lo Kat
-The largest producer in the herbal tea industry.
- Made from pure Chinese herbal medicine
• Wahaha
-The company produces more then 100 varieties of
products including milk drinks, drinking water,
carbonated drinks, fruit juice and tea.
Competitors
• Multinational competitors
• Coca Cola
• Coca-Cola has enhanced its research in noncarbonates and built a research unit dedicated to
traditional-Chinese-medicine drinks in China.
• Nestle
• Nestle continues to grow its business in China by
investing in its portfolio of local and global brands.
Master Kong’s Business Model
Business Model
• Vision
Honest , Pragmatic, Innovative
• Value Proposition
To deliver delicious and safe food and beverages by
an effective way
• Target customer segments
A wide range of customers
Business Model
• Partner network
A broad distribution and production network
Offers flexibility on supply chain and pricing
which enable Master Kong to respond to new
products launch faster
• Cost structure
Cost : Raw materials, Advertising, plants, operations
Business Model
• Distribution Channel : Value delivery network
Direct sales; Indirect sales
Past:
Producer
single Wholesaler/city
Recent:
Producer
Retailers
Postmen
Retailers
Customers
Customers
Business Model
• Distribution channel
~ 500 sales offices + 100 warehouses
Serving
> 5,000 wholesalers + 73,000 direct retailers
Contributed to the company’s rapid penetration in
the smaller cities and its lead in market share
Brands and Products
Brands and Products
Marketing Mix (4Ps)
• Product
• family branding
Line of products are sold with the same brand name
- Products gains recognition easily
- One product can affect the overall brand
• Product life cycle
- Master Kong beverages have existed in the market for a long
time – but still growth phase
- Innovative – understand consumer needs and introduce
new flavors
Brands and Products
Marketing Mix (4Ps)
• Product Mix
Products
Instant
food
Beverages
RTD Teas
Water
Juice
Carbanated
Drinks
Iced red tea
Mineral
water
Daily C
Pepsi soft
drinks
Green tea
Natural
water
Apple juice
Flower tea
Pineapple
juice
Oolong tea
Gaujava
juice
Mango
juice
width of product mix
Instant
noodles
Cookies
Muffins
Puff
length of product line
Brands and Products
Marketing Mix (4Ps)
• Price
• Neutral Pricing - The prices are set by the
general market, with the prices just at
competitors’ prices.
Yihaodian.com
Brands and Products
Marketing Mix (4Ps)
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Promotion
Advertising
Invite celebrities to be spokesperson
Design Special characters to attract attention
Penguins ( an image of cool )
Brands and Products
Marketing Mix (4Ps)
• Promotions
• Public relations – Charity works, sponsorships
and events
Brands and Products
Marketing Mix (4Ps)
• Promotion
• Sales promotion – free gifts, lucky draws,
discounts
Brands and Products
Marketing Mix (4Ps)
• Place
• Intensive distribution - convenient for consumers to
access
• Extensive distribution networks in first-tier cities
(Beijing, Guangzhou, Shanghai and Shenzen).
What are the values Master Kong created
for consumers?
What value does Master Kong
create for customers?
• Innovative products
• The leading innovator in the industry in
terms of flavors, techniques and
operational concepts.
• Transform the industry's "Made in China"
image to be "Created in China".
E.g. Introduced the classic braised beef
noodles to the market in the early 1990s. The
flavor has long been a favorite with Chinese
people.
What value does
Master Kong create for customers?
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Quality drinks
Ready-to-drink (RTD) Tea
Barley-flavored tea
Healthy ingredients, natural and unconventional taste
The release became an instant success.
What value does
Master Kong create for
customers?
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Unique lifestyle
Tea drinking – Traditional Chinese culture
Ready-to-drink tea
skip the brewing process
Healthy, yet more convenience
Adapt the traditional tea culture to modern lifestyle
Popular among new generation
How does Master Kong make its customers
loyal and happy
How does Master Kong make
customer HAPPY and LOYAL?
• Special customer experience
• Master Kong Iced Red Tea :
- Young , Modern, Energetic image
- Target customer : young generation
- More open to new ideas
• Master Kong Iced Red Tea has an official website
• http://www.myicetea.com.cn/
• Interact with young customer
How does Master Kong make customer
HAPPY and LOYAL?
• QR code , Funny Video, Fan meeting with stars
• Not only a ordinary drink – More fun
Master Kong’s Consumer Market
Master Kong’s consumer market
• Master Kong’s Beverages :
• Serve a wide consumer base spread across
geographies
• Young adults and health conscious consumers
are targeted (16-35 year-old)
Master Kong’s consumer market
• Characteristics affecting consumer behavior
• Culture
• Rising consumer awareness about the health
hazards of carbonated drinks
- A shift towards RTD tea and juice.
• Surge in the health conscious population (E.g.
Women )who prefer antioxidant property of
RTD tea
Master Kong’s consumer market
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Characteristics affecting consumer behavior
Economy
Increase in disposable income in China
Trigger the growth rate of RTD tea and Juice
market
Master Kong’s consumer market
• Characteristics affecting consumer behavior
- Product
- Price
- Package
- Flavors
SWOT Analysis
SWOT overview
STRENGTHS
-Innovative
-Broad Production and Distribution
network
-Long history and Good reputation
-Massive advertising and promotional
campaign
-Large market share
OPPORTUNITIES
- Support from government policy
- Advanced technology
- Rising purchasing power of
consumers
-Huge potential market
WEAKNESSES
- Damaged brand image
- Lower penetration in rural and lower
tier cities
THREATS
-Fierce competition
-Consumer’s taste is changing quickly
-Cost of raw materials is rising
SWOT analysis
Strengths
• Innovative
- The “New Taste for Traditional Drink” series were
well-received by consumers.
• Broad Production and Distribution network
- More accessible to consumers, larger flexibility
• Long history and Good reputation
• Massive advertising and promotional campaign
• Large market share
SWOT analysis
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Weakness
Damaged brand image
The Master Kong’s mineralized water incident
Internet rumors
Lower penetration in rural and lower tier cities
SWOT analysis
Opportunities
- Support from government policy
- Advanced technology : reduce cost
- Rising purchasing power of consumers
- Huge potential market : rural area, bottled water
market
SWOT analysis
Threats
-Keen competition : similar products
-Consumer’s taste is changing quickly
-Cost of raw materials is rising
Challenges in China
Challenges in China
• Facing the fierce competition in China, how
can Master Kong maintain or increase it’s
market share?
• How can Master Kong maintain their profit
growth in the saturating market in first-tier
cities?
Next step in China
Next step in China
• Kong-Pep partnership
-Purchase Pepsi Cola’s mainland business
- Form a “strategic alliance” to beat competitor,
Coca-Cola.
-Both companies expand their soft drinks markets
-Build a more diversified product profile
Next step in China
• Expand it’s distribution network into the
rural market
• The richest cities are nearing saturation
• Expand to rural market - next wave of growth.
• Current network : costly and inefficient to
distribute products to the hard-to-reach rural
outlets