1. Chow Tai Fook
Citi International Case Competition
Team TST 1
Cory Levinson
Jason Sigmon
Krysta Singh
Emily Zhao

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Takeaways
Clear Understanding of Best Strategy
Reasons for Selecting Strategy
Implementation

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Agenda
Strategy
Critical Success Factors
Chosen Solution
Implementation
Actionable Steps
Overview of Strategic Plan
Bottom Line
Financial
Timeline
Situation
Current Environment
Definition of Success / Timeframe
Analysis

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Changing Channel
Dynamics
How can Chow Tai Fook continue to be the number one mass
market jeweler in Mainland China?
Intensifying Competition
Shifting Needs in
Customers
Current Environment

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Market Potential
Population
Growth
Jewelry
Ownership
Urbanisation
Growth
Disposable
Income
Growth
Rise of
Middle Class
From 2006 to 2010, total population increased from
1,330mm to 1,360mm
From 2006 to 2010, Chinese urbanisation rate was higher
than 40%, increasing from 43.9% in 2006 to 49.7% in 2010
From 2006 to 2010, per capita disposable income of the PRC
increased from RMB11,759 to RMB19,109 at a CAGR of
12.9%
The urban population of middle class in the PRC is expected
to increase from approximately 235mm in 2010 to nearly
330mm by 2025
Per capita jewelry ownership is 1/5 of Hong Kong and less
than 1/10 of the US and Europe in 2009

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Market Forecast

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Department Store Channels

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Market Proliferation
Low-
end,
10.40
%
Mass
Luxury,
56.70
%
High-
end,
32.90
%
36.70%
39.60% 39.10%
Low-end Mass Luxury High-end
34.60%
39.10% 39.10%
Low-end Mass Luxury High-end
Low-
end,
7.60%
Mass
Luxury,
53.80
%
High-
end,
38.60
%
ChinaHongKong,
Macau,Other
CAGR

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Chinese Online Consumers
Chinese consumers currently prefer apparel online shopping

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Jewelry Stores in China Industry Revenue

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Consumer Perceptual Map
Price
Confidence & Trust
High
High

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Consumer Perceptual Map
“CTF is not positioned as a luxury brand.
It has its own DNA and culture. We are
a mass luxury brand with wide product
ranges to fulfill our customers’ dreams
during their life stages”
Kent Wong, Managing Director, Chow Tai Fook Jewellery Group
Price
Quality
High
High

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Communication Channels
Traditional Social Media Word of
mouth LAST
E-commerce
Role
Percentage of sales
will decline
Shift from
awareness to action Brand loyalty
Become a second
traditional platform
Future
outlook
Usage
Important but
declining
Increasing presence (goal of loyalty
programs)
Limited E-
commerce sales
Drive immediate/
short term sales
Create awareness Create loyal
customers
Drive non-traditional
sales

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Breaking Social Media Trends
Social Media spread awareness
Increasing level of engagement
by online customers
Sales Opportunity
Goal: Creating Action
Current Trend

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Utilizing Shifting Environment
282
309
345
359
377 380
233
277
303
318
356
388
118
155
209
224
240 242
100
150
200
250
300
350
400
Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12
UsersinMillions
Internet Surfing Medium
Desktop Mobile Laptop
Movement from information to communication allows a conversation with the
customer, ultimately allowing us to drive sales

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Xiao Qin and
Wang Keyu’s 25th
upcoming
wedding
anniversary
CTF discretely
reminds Wang
Keyu about the
event
Wang Keyu is
directed to
several platforms
to purchase an
anniversary
present from CTF
Brand
recognition
Increases
potential
returning
customers
Utilizing Data Analytics
Customer profiles Notifications
Sale
Generation
Brand Loyalty

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Data Analytics Current
• We have contracted with one of the top data
analytic and mining companies Analyx based
in Berlin Germany. Analyx helps Chow Tai Fook
– Manage Product Offerings
– Pricing
– Demand Estimation
– Customer Profiling
– Customer Retention

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Data Analytics Integration
Offline
Adaptation of trends
in-store
Online
Websites, social
media platforms,
mobile
Birthdays,
anniversaries,
habits, zodiac sign
Customer Profiling
Trend
Identification
Can identify shifts in
customer buying
patterns

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Goals of Data Analytics
• Our Goal from using data analytics is to get a better
sense of the wants, needs and desires of our past,
current and future customers.
– We need to use the data analytics to develop better
customer profiles.
– We need to use this as an early warning system that
identifies changing trends and can differentiate between
individual events and shifts in customer buying patterns.
– Need to integrate findings into developing websites, social
media platforms, and mobile that are relevant and sticky
to customers.
– This is where you start talking about some examples

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Takeaways
• SUMMARY of all of analysis
• Bullets
• You’ve got the handle on of an overall strategy
• Tactical presentation to meet your goals

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Vision for Success
Maintain position as market leader
Triple loyalty program within 5 years
Maintain 40% annual growth
Maintain margins at 30%
Develop enhanced customer profiles

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Chow Tai Fook Diamond Strategy
Customer
Management System
E-Commerce
New Products
In-store Experience
Online Presence
Drive sales while creating loyal customers

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The Perfect One
Enternal
Memories
Ceremony
Proposal
Brides-
maids
Your text here
Your text here
Video Contest
Planning
guides
Your text here
Free Wedding
Your text here
Family Friends
Your text to explain this label
RSVP

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The Perfect One
• Video Contest
• Every year winner receives a wedding worth
of RMB/HKD 250,000
• RSVP list
• Gift registry platform
• Honeymoon
• Wedding Album featured
Eternal Memories
The Proposal
The Ceremony

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The Perfect One
Current Marketing Campaign

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The Perfect Package
Proposal Ceremony Eternal
MemoriesPlanning Guide
RSVP
Gift registry platform
Photo album
Site Feature
Video Contest
Free Wedding, valued
up to RMB250,000

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New Products
45%
32%
13%
10%
Wedding Market
Investment Purchase Parket
Collection Market
Other
Limited Edition 生
肖 Charms
• New zodiac charm each year
• Limited production of each
edition
• New sets are designed every
12 years
• Complete sets will be
rewarded with a free piece of
jewelry from a selected
assortment

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E-commerce strategy
The Ideal Strategy for E-Commerce is
one that allows the online and in-
store process not only to coexist ,
but to drive customers to both
portals.

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Summer Prosperity
Promotion during lowest months
Mystery discount between 10%-100% revealed after purchase
Double promotion if used on all three dates
Joy
8/8
Life
7/7
Luck
6/6

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Lucky Fortune Discount Scheme
Potential
Discounts
Probability of
Receiving Discount
Customers Receiving
Discount*
Discount
Real
Discount
10% 80% 80,000 10% 8%
20% 10% 10,000 20% 2%
25% 5% 5,000 25% 1.25%
30% 3% 3,000 30% 0.90%
40% 2% 2,000 40% 0.80%
50% 0.50% 500 50% 0.25%
60% 0.30% 300 60% 0.18%
75% 0.15% 150 75% 0.12%
100% 0.05% 50 100% 0.05%
*Based off 100,000
customers
Avg: 13.6%

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Order Online-Pick up in Store
• For faster and less expensive delivery the
customer can order the item online and have
their purchases delivered to a store in there
area. There will be no shipping costs and the
customer will not have to worry about
returning what they purchased. Sales people
will also work to cross sell accessories and
other items to the customer when they come
into the store.

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Online Concierge
• For loyalty program members of certain levels
they will have an online concierge who will
answer any questions and concerns about
what they might be interested in purchasing.
• Concierge will be available twenty four hours
per day

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In Store Loyalty Hours
• During certain seasons and holiday periods
customers of a certain level will have access to
special hours where they can shop and be
served in a more relaxed and pleasurable
environment.
• Loyalty hours will also be available when the
company is introducing limited edition items.
• The highest level customers would also have
the option of pre-ordering certain items
online

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Chow Tai Fook’s global network
Delivering dreams through channel utilization
Distribution
Channels
Customer Channels Sales Channels
Communication
Channels
Strategy Alignment with Vision

37. 7/8/2014 37Situation Strategy Implementation Bottom Line
Distribution
Channels
Customer Channels Sales Channels
Communication
Channels
Expanding Customer Base
Expanding to peripheral customers
Tier III & IV Expansion
Sales Channel Growth
Same Store Sales Growth
POS Growth
NPV $17.3 B
These strategies will allow CTF to continually connect to customers on a deeper
level globally, and position itself favorably in the future
Channel Utilization???
Chow Tai Fook’s global network
Delivering dreams through channel utilization

38. 7/8/2014 38Situation Strategy Implementation Bottom Line
Positioning w/ competitors
Change in share of economy
Old Economy
(Agriculture & Manufacturing)
 Cheap labor abroad
 Exploit economies of scale
 M&A to exploit economies of sca
 High-value products
New Age Economy
(Recreation, Personal Services
 Stable macroeconomic
conditions
 Brand awareness
 Niche labor skills
 Product differentiation
Traditional Service Economy
(Wholesale & Retail)
 Rely on labor
 New technology
 Improve staff training
Shanghai Yuyuan Tourist Mart
Shanghai Laofengxiang Co.
Beijing Caishikou Department Store
Chow Tai Fook
Investment Economy
(Information,
Communications, Finance)
 Superior debt management
 Stable macroeconomic
environment
 Sound investment plan
Capital Intensity
China National gold

39. 7/8/2014 39Situation Strategy Implementation Bottom Line
• Brand Reputation
• Vertically Integrated
Process
STRENGHTS
• New Competitors
• Rising Gold Prices
• Government Austerity
Measures
THREATS
• Brick and Mortar
Preference
• Difficult to change rapidly
WEAKNESSES
• Expanded E-tail platform
• Increased Youth Purchasing
Power
OPPORTUNITIES

40. 7/8/2014 40Situation Strategy Implementation Bottom Line
SWOT- CHANGE FORMAT
40
OpportunitiesStrengths
Weaknesses Threats
 Largest market share
 Vertically integrated
 Distribution network
 Brand recognition
 Brick and mortar preference
 Rapid change presents
challenges
 China’s slowing GDP
 Gold price volatility
 Increasing competitiong
 Changing consumer habits
 Increasing middle class
 E-commercce

41. 7/8/2014 41Situation Strategy Implementation Bottom Line
Competitor notes
• Shanghai Laofengxiang Co., Ltd.
– To rapidly increase company operating scale, Laofengxiang has attached growing emphasis to its wholesale
business, which negatively affected company profit margins to a certain extent.
– Marketing channels have become more diversified, including regional general agencies, general distributors,
designated distributors, Image Shop and franchise stores. In 2012, Laofengxiang's sales revenue amounted
to $4.0 billion, up 21.0% from 2011.
• Shanghai Yuyuan Tourist Mart Co., Ltd.
– The rapid expansion of sales networks led to strong growth in gold sales. (Yayi Gold and Old Temple Gold)
– Yuyuan Mart revenue totaled $3.2 billion, with gold product sales accounting for 89.0% of total revenue.
• Beijing Caishikou Department Store
– Caibai is a jewelry retailer with strong indigenous features. Apart from a branch store established in Baotou,
Inner Mongolia, the other five chain stores of Caibai are located in downtown Beijing and suburban areas.
Its sales network coverage is much narrower than other large-scale jewelry retailers such as Chow Tai Fook
and Laofengxiang.
– highly competitive in the Jewelry Store industry in China in terms of single-store sales revenue, Platinum
sales of the company increased sharply in recent years after its cooperation with Platinum Guild
International.
– sales of platinum, diamonds, and gemstone jewelry have increased strongly in recent years.
• China National gold
– Strong company retail sales growth was accompanied by the rapid expansion of its sales network. In 2009,
brand operational centers were established to supply local markets and to promote brand awareness. By the
end of 2012, CHNGOLD had over 400 stores and 20 brand operational centers.

42. Marriage Distribution??
30%
70%
1st Qtr 2nd Qtr
70%
15%
10%
5%
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Your introductory text here
80 14%
10%
0%
1st Qtr
2nd Qtr
3rd Qtr
Category 2014 2012
Text in here 1,296,113 1,200,000
Text in here 60000 400,000
Text in here 1,296,113 1,200,000
Text in here 100,000 200,000
Category 2014 2012
Text in here 1,296,113 1,200,000
Text in here 446,735 400,000
Text in here 1,296,113 1,200,000
Text in here 100,000 200,000
 Your text here  Your text here

43. 7/8/2014 43Situation Strategy Implementation Bottom Line
E-commerce
Music
Travel
DatingNews apps
Online videos
Connected tv
Feasability
Profitability
 Not effective at transactional activities
 Netflix partnership
 Partnership with Spotify:
 Large market share still to be targeted
 Attracts a fifth of the interested public
 Just earns US$0.8 per month per user
 Fairly new partnership with TripAdvisor:
 Ranks as the 8th most used
Facebook app (23,7 million MAUs)

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0
10
20
30
40
Wiebo
Email
SMS
On-line
Payment
Series 1
Series 2

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Sales
Mainland
Gold
Other Materials

46. 7/8/2014 46Situation Strategy Implementation Bottom Line
Timeframe
XXXXXXX
Time
Number of features released
at any given time
(the wider the more features)
Newsfeed launches
& updates
2006
Text & video upload from mobiles
Platform for developers
Facebook pages
First targeted ads
2007
Like button for posts
Netflix integration
Data transfer to TweetDeck
Increased photos capacity
Inbox folders development
Xbox Live Experience
2009
Chat
iPhone application
Microsoft Live Search
2008
Chat integrated into desktop
Use of o.facebook.com
Like button for comments
Privacy controls on mobiles
Data integrated to Bing
Skype, TripAdvisor, Scribd
2010
New photo uploader
Tagger inferface
Facebook integration in Android
Groups’ features improvement
Facebook for iPad
Messenger application on mobiles
2011

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Critical Success Factors
Establishment of brand names
Extensive distribution network
Integrated operations
Effective inventory management

52. 7/8/2014 52Situation Strategy Implementation Bottom Line
Force Field

53. 7/8/2014 53Situation Strategy Implementation Bottom Line
The Perfect One
Exclusive online photo albums
Engagement & Wedding Jewelry
Event Resources
Savoring the moment
Men
Bridesmaids
Wedding planning checklist
Strategic partnerships
Online registry

54. 7/8/2014 54Situation Strategy Implementation Bottom Line
The Perfect One
Focus is on
bride
Men
Bridesmaids
Family
Wedding planning
checklist
Strategic
partnerships
Online registry
Exclusive online
photo albums

55. 7/8/2014 55Situation Strategy Implementation Bottom Line
Sales
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

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