中国市场进入战略管理知识研究报告.pptx

-1-Achieving leadership in China detergent marketHenkel(China)Investment Co.Ltd.,Roland Berger&Partners International Management ConsultantsBarcelona Beijing Berlin Brussels Bucharest Budapest Buenos Aires Delhi Detroit Dsseldorf Frankfurt Hamburg Kiev Kuala Lumpur LisbonLondon Madrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna ZurichNirmainterim-rpt中国市场进入战略管理知识研究报告第1页-2-ContentsPageA.Fierce competition from international and domestic players has imposed 3 great challenge on HenkelB.To achieve turnaround,Henkel should adopt an aggressive expansion strategy 10C.Roland Berger will help develop the appropriate strategy:project outline12D.Project organization and time frame 22E.Value of the project 12F.Roland Berger is a best partner of Henkel to exploit China detergent market:12 selected referenceAnnex A:Case study-Qiqiang32Annex B:Case study-P&G42Nirmainterim-rpt中国市场进入战略管理知识研究报告第2页-3-A.Fierce competition from international and domestic players has imposed great challenge on Henkel中国市场进入战略管理知识研究报告第3页-4-After fast increase in earlier 1990th,annual growth of China detergent market has slowed down in these yearsNational market volume of laundry detergentin Mio.tons19931994199519961997*EstimationSource:Chinese light Industry Yearbook(1999),Roland Berger&Partners analysis1.92.22.82.62.72.93.0+8.2%p.a.23%p.a.Nirmainterim-rpt中国市场进入战略管理知识研究报告第4页-5-Gross profitability of Whitecat regular powderOvercapcity in detergent industryPrice reduction of Major brand(RMB/Kg)Overcapacity in detergent indudstry leads to price reduction and thus reduces the product profitability 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 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,the utilizaition rate will be furthur reduced to about 50%-60%11%1998年年 1999年年3%TideOMO18.016.518.817.35.54.8Whitecat(regular powder)1998年1999年Average price reduction of the whole industry is 10%Nirmainterim-rpt中国市场进入战略管理知识研究报告第5页-6-After having established prominent position in high end market,P&G and Unilever 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(Price：7RMB/Kg)Proportion of high end market is 11.9%Proportion of middle end market is 31.8%Proportion of low end market is 56.3%P&GOthersBenckiserUnilever P&GBenckiserOthersHenkelHenkelUnileverOthersResource:AC Nielson retailing audit 1999-Nirmainterim-rpt中国市场进入战略管理知识研究报告第6页-7-Brand Share CompanyTide 6.0%P&GAriel 2.2%P&GOMO 2.4%UnileverPower 28 1.1%BenckiserPersil 0.1%HenkelMarket share of international playersbrands in different segmentBrand Share CompanyGFL 2.2%P&GPanda 1.9%P&GWIPP 1.0%HenkelTianjin 1.8%HenkelDosia 1.0%BenckiserBack-upMarket stucture of middle end(Price：710RMB/Kg)Market structure of low end(Price：10RMB/Kg)Resource:AC Nielson retailing audit 1999-Nirmainterim-rpt中国市场进入战略管理知识研究报告第7页-8-Nirmainterim-rpt中国市场进入战略管理知识研究报告第8页-9-Although a late comer,Benckiser has successful penetrated north market with Dosia through well-designed entry strategy Through acquiring distributors from P&G,Dosia chose Liaoning province as its initial entry areaIn Heilongjiang and Jilin province,competitors are not so strong as that in other parts of China.local brands,such as Tiantian,are in dominant positions,so Dosia chose these two province as subsequent penetration areasCompetition is in choas in Shandong,and distribution network is not well regulated with lots of small distributors/wholesalers competing with each other,so it is easy for Dosia to penetrate the market and cultivate its qualified disbition channelIn order to guarantee the success,channel penetration is also backed up by strong advertisement champaign Marekt share of Dosia in north China Market entry design Jan 1999Mar 1999May 1999Jul 1999Sep 1999Nov 1999Jan Resource:AC Nielson retailing audit 1999-Nirmainterim-rpt中国市场进入战略管理知识研究报告第9页-10-Some domestic players are also making efforts to achieve fast growth and national presenceMarket share of QiqiangMarket share of LibaiResource:AC Nielson retailing audit 1999-Nirmainterim-rpt中国市场进入战略管理知识研究报告第10页-11-Fast growths of domestic players are supported by their rural focus strategy,nationwide manufacturing network and direct sales model Market penetration strategy taken by fast growing domestic playersRural focus strategyNationwide manufacturing networkDirect sales modelRural market is large but is dominanted by weak regional brandsInternational players have weak performance in rural areaLogistic cost is high in detergent industry accouting for over 10%in total value Long distance transportation in China is not oonvient For a new comer,it is not easy to get qualified local distirbutorsReason MethodResult First penetrate rural market and townAfter achieving strong perfromance in rural area,then penetrate city and large countyAcquiring local players in different areas(Qiqiang)Signing OEMcontracts with local players in different areas(Guangdong Libai)Directly selling products to low level dealers or retailing outletstrong channel promotionAvoiding competing with strongs playersGaining market share with comparatively low marketing investmentAvoiding competing with local playersReduction in logistic costFast market penetrationBut the sales expense is high and the sales force should be very diligentNirmainterim-rpt中国市场进入战略管理知识研究报告第11页-12-In order to achieve turnaround,Henkel should adopt an aggressive expansion strategySix regional brands with comparative weak market performanceDeterioration of market share for each brand,defeated by strong international or domestic brands one by oneAggressive expansion strategyNo change Turnaround pointLeadership in detergent marketNirmainterim-rpt中国市场进入战略管理知识研究报告第12页-13-Strategy formulation should be based on full understanding of China detergent market and full consideration of three strategic issuesStrategy formulationChoice of focus brand and strategic expansion routeEstablishing reliable and low cost logistic networkDeveloping rural entry modelFull understanding of China detergent marketNirmainterim-rpt中国市场进入战略管理知识研究报告第13页-14-Per capita consumption gradually decreases from south to north and from east to westConsumption of laundry detergent in Chinakg,per capitaSource:Roland Berger&Partners interview1.8823 kg per capita1.72 kg per capita3 kg per capita1.881.881.9521.821.953.351.951.952.352.353.351.6821.681.682.35Much low areaNirmainterim-rpt中国市场进入战略管理知识研究报告第14页-15-2512(Shanghai)The high population density is located in the North China plainSource:Roland Berger&Partners interview146(Jilin)343(Hebei)586(Shandong)578(Henan)715(Jiangsu)273(Fujian)308(Hunan)392(Guangdong)108(Yuannan)362(Chongqing)471(Anhui)Back upMunicipality population density(includeing suburb area)Shanghai2512Beijing738Tianjin866Chongqing362over 500 capita per square kilogram 276(Liaoning)866(Tianjin)738(Beijing)209(Shanxi)443(Zhejiang)201(Guangxi)326(Hubei)188(Sanxi)177(Sichuan)400500 capita per square kilogram 300400 capita per square kilogram 200300 capita per square kilogram 100200 capita per square kilogram less 100 capita per square kilogram Nirmainterim-rpt中国市场进入战略管理知识研究报告第15页-16-For different region,market segment structure is also different because of various income level and consumption habitSegment structure by regionCommentsNorthWestEastSouthLow end market account for over 50%of total market and is especially large in the low developing North and West of ChinaMiddle-end product take a higher share in East and South of ChinaHigh end market is comparatively higher in south market because of its high income level and accptance of concentrate powder50.9%56.7%57.3%40.9%45.9%30.6%31.8%39.9%9.2%11.5%12.1%13.2%Total,000t778668537745High(10RMB/kg)Middle-end(710RMB/kg)Low-end(7RMB/kg)Resource:AC Nielson retailing audit 1999-Nirmainterim-rpt中国市场进入战略管理知识研究报告第16页-17-East China is in intense competition and major players are all national brandsmarket volume by province 000 tonBrief analysis 115.7Jiangsu 307.570.3224.1HenanZhejiangShanghaiAnhui60.4Jiangsu and Henan have the largest market volume in east ChinaJiamei,Whitecat,GiGE and Fangcao are traditional brands with strong regional market basesdistribution network is comparatively mature with some large distributors in dominanceQiqiang has successfully penetrate east China and established leadership with strong sales campaignLibai is planing to penetrate east ChinaDiaopai is also making efforts to enlarge its market share by offering high margin incentive to distributorsTotal:778,000 tonsEastNirmainterim-rpt中国市场进入战略管理知识研究报告第17页-18-Low-end market size in South China000 TonSouthIn South,we recommend Hunan and Hubei are target market for market entry because Libai almost control the whole low-end market in GuangdongCompetitive landscape 170Hunan190118179HubeiJiangxiGuangdongFujian84Libai almost control the whole low-end market in GuangdongResun as a regional brand holds half of Hunans low-end marketOne flower and Quanli has 30%and 20%of low-end segment respectively in HubeiHunan and Hubei are the target market due to their large market size and weak competitorsTotal:745,000 tonsNirmainterim-rpt中国市场进入战略管理知识研究报告第18页-19-West region can only be Nirmas potential market in the second stage because of its limited market size and strong competitorLow-end market size000 ton77Sichuan15469102GuangxiYunnanShanxiGuizhou69Qiqiang takes 44%of low-end market with three manufacturing sites(Sichuan,Guizhou and Sanxi)P&G take over one major local brand(Nanfeng)in chongdu to expand low-end marketWhitecat has setup a manufacturing site with 80,000 ton capacity in ChongqingLow population density and per capita consumptionWest region can only be Nirmas potential market in the second stageTotal:537,000 tonsWestAnalysis of opportunity Chongqin65Nirmainterim-rpt中国市场进入战略管理知识研究报告第19页-20-Regional and local brands play the major roles in the Northern marketLow-end market size in North 1 and North 2000 tonCompetition volume shareNorth 228%22%3%North 130%37%TiantianOthers2%14%30%QiqiangYunquanMulanJialiQiqiangDeerJialiJianlongSeagullOthersSource:by Henkel(Tiantian)and Unilever(Yunquan)Except Qiqiang four local brands are the major players in North 1 and North 2North1:Liaoning,Jiling,Heilongjiang458210North2:Shandong,Hebei,Shanxi,BeijingTianjing14%North16%Nirmainterim-rpt中国市场进入战略管理知识研究报告第20页-21-Shandong and Hebei are suggested as strategic focus in early entry periodmarket size in North 2 sub-region000 tonCompetition68Shandong18141.5132HebeiShanxiTianjingBeijing35.6In Shandong,Deer and Jiali holds 30%and 25%of the low-end market respectively.But weak financial srength and less sophisticated marketing skill undermine their competitivenessIn 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 dominant brand is non-existent yetTotal:458,000 tonsNorthNirmainterim-rpt中国市场进入战略管理知识研究报告第21页-22-ConsumeracceptanceProfile of major product formTrendProduct featureAverage price RMB/kgMarket shareMajor brandProductiontechnologyRegularConcen-trateUltra-concen-trateSpray dryDry mixAgglomera-tion TideWhitecatQiqiangArielWhitcatOMOGaochao(whitecat)90%8%2%7.911.418.0HollowLow densityFoamingHigh water solubilitySolidHigh densityNon-foamingExcellent stain removing efficacyHigh fluidityExcellent stain removing efficacyWell accepted in ruralHigh price undermines affordability and consumer acceptableNew productSpray-dry technology dominate the laundry powder industry sectorSource:Roland Berger&Partner interviewsNirmainterim-rpt中国市场进入战略管理知识研究报告第22页-23-Rural consumer preferencePrice and money value are two most important factors influencing rural consumers purchasing decisionFoamingFragrantWater solubilityBig package size(400g,750g)ProductPrimarily through grocery in village/townMarket/fair especially weekly marketPlaceEffective tool to induce trial during introduction period Using daily necessities as prize is well acceptedPromotionPopular acceptable price in rural market:6.0 RMB/kg Price rangeSource:Roland Berger&Partners interviewNirmainterim-rpt中国市场进入战略管理知识研究报告第23页-24-Qiqiangs 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%012345675.25.46.06.26.36.4TiantianResunYueyuehongFangcaoSeagullQiqiangQuanliMianghuaPrice(RMB/kg)Volume share3%3%30%6%5%3%3%3%Nirmainterim-rpt中国市场进入战略管理知识研究报告第24页-25-Rural consumer behaviorImportanceKey factorPrice is the first decision factor for rural consumer to buy detergent powerPriceStain removing EfficacyFoamingFragranceWater solubilityWhiteningEnzymatic+0-Price is the most important factor to affect consumer behavior in rural marketThe consumer also pay considerable attention to the stain removing efficacy of detergent powderThe rural consumer often evaluate the stain removing ability through the foaming effect of the detergent powderMost of the rural consumer also like the fraqrance brought by deterrent powderBecause in general fake product cant solubilized in water,the feature can help consumer distinguish real product with fake productThe rural consumer seldom care for the whitening and enzymatic ability of detergent productExample:Decision factors of rural consumerThe customer behavior is fit with Nirmas low price strategySource:Roland Berger&Partners interviewBack-upNirmainterim-rpt中国市场进入战略管理知识研究报告第25页-26-Location of manufacturing site of QiqiangMarket share by regionIn order to reduce the transportation cost,Qiqiang set up seven mainfacturing site national wideSource:Roland Berger&Partners interviewEastSouthWestNorth Guizhou Benxi Sichuan NeimengShanxi Anhui XianNo manufac-ture siteExample:Qiqiangs manufacturing site vs.Market performanceQiqiangs headquarterBack upNirmainterim-rpt中国市场进入战略管理知识研究报告第26页-27-Focus on one regional market and concentrate the marketing resources at the beginningUsing accumulated experience to expand new market3 A systematic expansion strategy should be applied DescriptionSource:Roland Berger&Partners interview and analysisARegional penetrationBLow priceCFront attackDMotivated dealerEBenefited customerRecommended retail price is about 5.56.0 RMB/kgHigher price in the beginning to build up brand imageAllocating strong sales team to a new market by intensive marketing and promotionDelegate the built up market to a qualified distributor to manage Development a incentive sales policy to motivate the dealers along the distribution channelAdopting well-acceptable approach to promote in the rural marketNirmainterim-rpt中国市场进入战略管理知识研究报告第27页-28-Retail price of major brand in ChongqingRMB/kgB The target retail price for Nirma should be less than 6 RMB/kg6.25Libai7.15.36.5WhitecatQiqiangNirma