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    Li ning group5 2ibm2 Li ning group5 2ibm2 Document Transcript

    • 25/5/2010670560970280ExportLi Ning<br />Marketing Plan2IBM2Thomas van Bloppoel (551864)Jeroen Bos (532865)Jim Colin (539594)Boyd Scholten (609310)Baseet Qureshie (551526)center4489450<br /> <br />Table of Contents<br />Executive Summary3<br />Problem Statement3<br />External / market analysis on macro and meso level4<br />Internal analysis7<br />SWOT analysis9<br />Confrontation matrix9<br />Segmentation, market targeting and positioning10<br />Strategy12<br />Objectives14<br />Marketing mix15<br />Budget17<br />Recommendation to the decision maker18<br />Source list19<br />Appendices20<br />Executive Summary<br />The Li Ning Corporation faces a few problems.. First of all, Li Ning wants to focus on internalization. This means that Li Ning also wants to be active outside of their domestic country China, where they are already successful. They already tried to open a store outside of China but were not successful in it. So the problem is whether to internationalize or focus on China? And if they want to internationalize, how should they do this?<br />We decided to expand into other regions of China that we aren’t in to increase our domestic sales. Furthermore, we decided to sell Li Ning products in another country: Indonesia. We found out that this country has a strong economy and are active in the sports which our products target. We are going to acquire the sport brand League to take the advantage of a loyal customer base and existing distribution channel and open our own Li Ning stores in Indonesia <br />Our shot-term objectives are:<br />- Increase revenue by RMB 550,000,000.- Reduce the amount of business which Li Ning has in China from 98,8% to 90%. - Gain 10% market share in Indonesia. - Gain 10% market share in China’s first-tier cities Beijing and Shanghai. <br />Our long-term objectives are:<br />- Increase revenue by RMB 2,000,000,000. - From the total amount of business Li Ning has, at least 25% should be abroad. - Gain at least 35% market share in Indonesia- Gain 30% market share in Beijing and Shanghai. - Gain a footstep in the basketball and football segments with a 15% market share.<br />We are going to achieve these goals by:<br />• expand our product sales to Indonesia<br />• create a joint venture with the Indonesian sports brand League<br />• Also focus on first-tier Chinese cities<br />• target the north, west and south side of China<br />Problem Statement<br />Li Ning Co. Ltd. (hereinafter referred to as: Li Ning) has experienced tremendous growth since it was founded, nevertheless, Li Ning is faced with very important decisions that will need to be made in the coming years in order to continue to grow. Li Ning developed into an established and well known brand within the Chinese market, moreover it claims to take account for 50% of the Chinese sportswear-market sales. <br />As the Chinese sportswear-market grew with staggering numbers on a year on year bases, the board of directors of Li Ning were not very interested in expanding into oversea markets, as there was still a lot to gain within the domestic market. Besides that, many people within in the company were reluctant towards committing its resources to internationalization, as they felt that in order to fight back competition in the Chinese market all resources were required. This resulted in a defensive strategy in order to protect the position of Li Ning within the domestic market, as companies like Adidas and Nike made successful attempts to expand into the Chinese market. As off the end of 2008 98.8% of Li Ning’s business remained in China.<br />Up until now varies attempts were made to turn Li Ning into international brand, however these attempt were not made with full support and maximum effort, so have not resulted in a profitable world-wide position. The board of directors will have to decide wether they are ready for big international steps or should they continue to just focus on the Chinese market ?. Moreover, if they decide to internationalize, how should they do it ?, these are the questions that arise and will be answered according to our knowledge in the following report. <br />External / market analysis on macro and meso level<br />Market Analysis<br />The worldwide sales of sports equipment, apparel, and footwear sales remained the same at € 219 billion in 2008, whereas in the previous year there was a 4 percent increase. In emerging countries as China there was a double digit growth in the sales of equipment, apparel, and footwear. The reasons behind this could be the growing middle class which has more disposable income, the overall growth of the country China and the fact that the Olympics were held in China last time. There was also a rising sales number in Africa and the Middle-East. However, in more developed countries and regions as Japan, North America and Western-Europe, the sports market barely grow as much as the overall economy. Li Ning has to take into account whether or not to only aim for the developing countries or also for the developed ones.<br />Although the sales of sports equipment, apparel, and footwear may have become stagnant, the use of them is on the rise. This is especially seen in the markets for running, walking/hiking, swimming, cycling, training/fitness/work-out, and soccer/football. Li Ning can take advantage of this since one of its main product categories is running. The reason why these sports are winning in popularity could be attributed to the easiness, family friendly and fun nature of the sports. <br />In Li Ning’s case it is important to look at the future opportunities for sales in China. Unfortunately, there are signs that show that the sales there might decline. The impact of the decline of the Chinese economy can mean declining future sales numbers in China.<br />Competitor analysis<br />Li Ning has to deal with 3 noteworthy competitors: Nike, Adidas and Anta. Below is a brief description of them.<br />Nike: Just do it<br />Nike is a global marketer of athletic equipment, apparel and footwear. The following brands are also under the company: Converse, Umbro, Hurley and Cole Haan. The majority of the manufacturing of their products happens in Asian countries as China and Vietnam. Besides equipment, apparel and footwear, they also produce swimwear, children’s apparel, training equipment, golf accessories, electronic devices and eyewear. As an organizational unit, China is important for Nike’s long-term competitiveness and growth.<br />Adidas: Impossible is Nothing<br />Adidas is one of the global leaders in the industry of athletic equipment, apparel and footwear. The following brands are also under the company: Reebok and TaylorMade-Adidas Golf. Adidas also sees China as an important market for its feature growth; this can be seen from their opening of the Beijing Adidas Brand Centre. <br />Anta: Keep Moving<br />Anta is a local rival of Li Ning, especially active in China. It has been building an international brand image and has signed NBA and tennis players. Anta has opened several flagship stores in major cities like Beijing. The company controls its key value chain activities due to being a vertically integrated company.<br />Case Li Ning “domestic and international competition”<br />External environment analysis<br />Demographic<br />Li Ning is a Chinese sport equipment, apparel and footwear company which is the number one sporting goods brand in its domestic country with 98,8% of its business located in it. Since Li Ning is questioning whether or not to do so, it has to take in account that focusing on internationalization might jeopardize its market share in China due to pressure from domestic and international competition. <br />In China there is a large untapped market potential for Li Ning, even though they claim to have up to 50% of China’s sport wear market sales. Their primary focus is on second-tier cities where its western competitors have not invaded yet. By also targeting the first-tier cities, Li Ning could increase their market share and sales. First tier cities include Shanghai, Beijing, Guangzhou, Shenzen and Tianjin which have a combined population of over 55 million.<br />Economical<br />As almost every company had to face the past two years, the economical recession isn’t over yet. Especially in China where most people don’t have much spending power and the economy relies on exports of goods. Not only the poor but also the wealthy people will have less to spend. This also applies to western countries. If the economy is doing badly then buying new sport merchandise is one of the things on which people will cut back as soon as possible. So this could mean bad things for Li Ning.<br />Sociocultural<br />The use of sports equipment, apparel, and footwear is on the rise worldwide and Li Ning could take advantage of this. Especially since one of the biggest markets on the rise is that of running merchandise, one of the core product groups of Li Ning. <br />In China there are over 600 million people under the age of 24, this could be a large target group for Li Ning since this is an age group who practices sports a lot. The internet is immense popular in China, advertising through it could be a wise investment for Li Ning.<br />Technological<br />Li Ning offers products for basketball, running fitness, football, tennis and general exercise. Due to technological improvements in footwear the last few years, it has become an increasingly important product category. The quality of Li Ning’s products is comparable to western competitors. Technological advancements are important since customers would like to have the best to excel at their sports. <br />Case Li Ning “Product portfolio”<br />Ecological<br />China is the number one polluter of the world. The main reason for this is the fact that the western countries have moved their manufacturing base to China over the last decade or two, thus outsourcing the pollution for the products they use to China. Corporations did this because of the low labor wages in China could bring less production costs. <br />Political<br />Several political scientists say that China is one of the last five Communistic states in the world. The Communistic government causes heavy restrictions in many areas, particularly the Internet, the press, freedom of assembly, reproductive rights, and freedom of religion. Although the citizens are heavily restricted from their freedom, the level of support to the government action and the management of the nation are among the highest in the world, with an 86% of people who express satisfaction with the way things are going in their country.<br />Country analysis<br />By analyzing the potential growth in western markets it is clear that Li Ning would have a hard time increasing its sports merchandise sales in those markets. We decided to analyze an Asian country to sell Li Ning’s sport goods since Li Ning already has a large market share in its domestic country China. This way Li Ning would also be familiar with handling a market that has common similarities with its own market. The country we decided to analyze in the expectation to increase our sales is Indonesia.<br />Indonesia has a population of around 228 million citizens which is growing 1.2% annually. Currently, there are more than 32 million Indonesians living below poverty lines and half of all households remain at national poverty line($22). This could be a potential problem for Li Ning since most of the people in Indonesia can’t afford to buy sport merchandise. Employment growth has been slower than population growth and is also doing poorly in a number of health and infrastructure related indicators. <br />In addition, the age structure is as follows: 28.4% of the population is between 0 - 14 years, 65,7% is between 15-64, and 5,8 % of the population consists of elderly who are older than 65 years. <br />Indonesia houses various ethnic groups, such as the Chinese, Javanese, Sundanese and Malay. The Chinese people in Indonesia represents 3,7% of the total population and are mainly findable in Jakarta, West Kalimantan, and North Sumatra.<br />Nevertheless, Indonesia has been showing large economic growth over the past few years. The national economy is expected to grow by 5.5 percent in 2010 and by 6 percent in 2011. It is the largest economy in Southeast Asia. A survey of the International Monetary Fund showed that Indonesia has been less affected by the recent global recession. Besides, Indonesia has a free trade agreement with China and has an excellent diplomatic relationship with China for more than 60 years.<br />Badminton and football are the two most popular sports in Indonesia. Indonesian teams have won the world team championship of men's badminton thirteen of the twenty-five times that it has been held since 1949, as well as Olympic medals since the sport gained full Olympic status in 1992. This is an enormous potential market for Li Ning since one of its two kinds of core products is badminton. <br />Internal analysis<br />Target Market<br />The initial focus of Li Ning’s founder, Guangdong Li Ning, was to support sports initiatives among the Chinese youth, today Li Ning still focusses on the Chinese youth as there main target group.<br />Positioning<br />Li Ning competes with brands like Nike, Adidas and Reebok. Li Ning offers products of the same high quality as their competitors. Li Ning has multiple R&D centers where they develop new en trendy products. There product lines have a trendy and youthful image, comparable to, e.g., Nike and Adidas. Li Ning differentiates in terms of pricing, Li Ning products are a lot cheaper than, e.g., Nike and Adidas, while still projecting the same trendy image. <br />Competitive advantage <br />The major advantage Li Ning has is years of experience and knowledge of the Chinese sportswear-market. The big cultural differences between the Chinese and Western markets lead to an advantage for Li Ning. In terms of, e.g., consumer buying behavior and sociological factors, Li Ning has a better understanding of the market. Moreover, Li Ning established a franchise system which covers even the most remote regions within China. Due to this channel penetration, that mainly focusses on second- and third-tier cities, they have a competitive advantage in terms of distribution. Although these cities have a lower income level, they do have the highest grow potential. Up till now Li Ning’s international competitors are located only in the bigger cities of China, and are not able to reach out to the smaller cities of China. <br />Marketing mix<br />Product<br />Ni Ling’s product line contains apparel, footwear, and accessory products for sports. Li Ning focusses in particular on product lines offering equipment for basketball, running, fitness, football, tennis, and general exercise. The most revenue is earned through apparel, accounting for 47% of revenue, than footwear accounting for 45% of revenue and accessories take account for 8.2% of the revenue. The quality of the products is perceived to be high, comparable to products of Nike and for example Adidas. Li Ning makes sure that their products are modern, innovative and fashionable through their R&D centers. For example, Li Ning launches approximately 600 new styles of shoes a year. To conclude, Li Ning offers trendy, high quality and innovative products. <br />Promotion<br />Li Ning’s promotion seems to be quite efficient and profitable. Li Ning mainly promotes its brands through sponsorships, e.g., Li Ning is an official sponsor of the NBA (national basketball association). They also sponsor individual athletes, e.g, Damon Jones and football stars from the English Premier League. Moreover, Li Ning sponsors international sports events like, the Olympic Games in Barcelona, Atlanta and Sydney. In this way Li Ning tries to improve its image towards the Chinese youth. For the Olympic games in Beijing they only sponsored several sports teams but, nevertheless, they gained the reputation for being the most efficient promoter in terms of spend versus return. As highlight for the company its founder, Guangdong Li Ning, got selected as final torchbearer to carry the Olympic flame into the Olympic Stadium. <br />Place<br />Li Ning operates on a franchise base, and as of June 2009, it had 6,809 retail stores, of which 130 distributers operated 6,464 stores. Li Ning distributes in over 15 provinces all over China. Where there main international competitors only sell in first-tier cities like Beijing and Shanghai, Li Ning effectively also sells in second-tier and even third-tier cities. Li Ning has an excellent distribution channel throughout China. Sales made to franchise distributors make up for 88.1% of Li Ning’s revenue, while only 7.8% of the revenue is made through sales made by stores owned and managed by Li Ning. Li Ning owns 11 flagship stores in prime locations in major first-tier Chinese cities and one in Singapore, they also have store in Portland, U.S.A. <br />Price<br />For the Chinese average Li Ning’s products are quite expensive, although when you compare them to their direct competitors they are a lot cheaper. Li Ning’s strategy in terms of pricing is to offer the same high-quality and trendy products as their competitors do but for a lot less. <br />Financial performance<br />Li Ning’s financial performance is very strong and shows a tremendous growth each year, they are even forecasted to hold on to this growth in the coming years. The following numbers will give some inside in their financial and especially their growth figures.<br />Li Ning’s revenue has increased from1,878,102 U.S dollars to 6,690,073 U.S Dollars over the period 2004-2008, this is a grow of 356.2% in revenue. Li Ning is expected to continue to grow, as for example, the footwear market in China is expected to grow over 8% on average a year. Li Ning improved its equity ratio over the same period as, Total Assets in 2008 accounted for 4,336,929 U.S. Dollars of which the equity holders equity amounted 1,896,413 U.S Dollars, while in 2004 Total Assets were just 1,481,431 U.S. Dollars with a Equity holders equity of 1,010,017. Shareholders can be satisfied as EPS (earnings per share) increased from 13.8% in 2004 to 69.63% in 2008. Even Li Ning’s profit margin increased from 7.7% in 2004 to 10.1% in 2008. Overall you can say Li Ning’s financial performance is outstanding. <br />SWOT analysis<br />Strengths1. Li Ning is China’s No. 1 sports good brand. 2. Firm grip of consumers in second- and third-tier cities3. Quality of products is on par with those of Adidas, Nike, and Reebok, yet the prices are much lower. 4. On the domestic market the quality of their products is relatively much higher. 5. Is known for making efficient promotions, i.e. Olympics games, sponsoring of individual sports players.<br />Weaknesses1. Li Ning’s products are somewhat more expensive than those of domestic competitors. 2. 98,8% of Li Ning’s business is in China. <br />Opportunities1. Li Ning has little to no market share in first tier cities like Beijing and Shanghai. 2. Through internationalization Li Ning may fulfill their goal to become one of the 5 biggest global sporting goods brand by 2018. <br />Threats1. Li Ning is starting to lose market share to Nike and Adidas as they are expanding into the smaller cities. 2. Basketball and football are firmly in the hands Nike and Adidas globally. 3. Market growth has slowed in 2009 to an estimated 4% growth rate. <br />Confrontation Matrix<br />Offensive Strategy:O1, S1, 3-5. By opening up more stores and putting better quality/price products onto the market, they should be able to gain (more) market share in first tier cities. O2, S1, 3, 5The ultimate goal is to become one of the biggest sporting goods brand. Li Ning’s products are of good quality/price level, they just have to find the right markets. Some markets are in the hands of competitors, but others still have potential. For example, Indonesia. A country where badminton is very popular and has great potential to growAdjust Strategy:O1, W1By lowering product’s prices, Li Ning can more easily gain market share in first tier cities. O2, W2By maintaining nearly all business in China, they will never become one of the biggest sporting goods brands. They will have to expand to other countries. <br />Reactive StrategyT1, S1, 3-5Li Ning must differentiate itself from Nike and Adidas by using its market knowledge, and keeping their price under the competitor’s. T2, S1, 3-5By maintaining a low price, and more promotion they have to try to differentiate themselves in the basketball and football segments. Defensive StrategyT1, W1By lowering their prices they will reduce market share losses in the domestic market. T2, W2By expanding to countries abroad, Li Ning potentially may gain some market share in the football and basketball segments. <br />Segmentation, Market Targeting, Positioning<br />Segmentation<br />Li Ning operates in a very large market. The sales in the sports equipment, apparel and footwear were $219 billion in 2008 worldwide. This shows that the market in which Li Ning operates is a very competitive and demanding one.<br />Li Ning has chosen to situate their franchise system in second or third-tier cities. This shows that they have segmented the market in a geographic manner. 76% of their stores are located in second or third-tier cities. Not only have they chosen to have franchise stores in the slightly less popular cities, they have also located most of these stores in the Eastern part of China. This is generally known as the most wealthy area of China with cities such as Shanghai and Beijing. Li Ning only has 11 flag stores located in first-tie cities. This only accumulates to be 0,17% of the franchise stores in which Li Ning sells their products. The reason that they do operate in a couple of first-tiercities is to increase the influence of the Li Ning brand and to make sure that the sales go upward. <br />They have also segmented the Chinese market into a lifestyle The reason that Li Ning hardly operates in the first tier cities is that the people who live in these cities have a different lifestyle then the people who live in the second or third-tier city. Generally speaking, the people in the big cities are relatively young and Nike and Adidas see China as a very promising country and they have invested heavily in new stores and into the Beijing Olympics of 2008. The inhabitants of places such as Beijing and Shanghai are more likely to buy sports clothing of Nike or Adidas because these brands are more internationally orientated so it’s more an image thing for the young people. In addition to that people who have money live in the larger cities and they have a larger disposable income and they are more likely to spend their money on more expensive products such as Nike and Adidas. <br />Finally, Li Ning can also choose to segment the market into the usage of the products. The product range of Li Ning is vase and in consists of a lot of different products. And in addition China is a very large country. So Li Ning should sell certain products in certain areas of China. For example, if running is very popular in certain areas then Li Ning should sell more running products or have staff walking around in the stores which knows more about running then in other stores. And if there are a lot of young badmintons talents in certain areas then Li Ning could choose to sell products which are more focused on the badminton.<br />Targeting<br />Li Ning has become a large company for the past decade. This is due to a couple of reasons but a very important factor is of course the booming economy of China. This country has changed quite dramatically for the last 10, 15 years. China used to be a communistic country under the policy of Mao Zedong. For the last decade China has become a lot more ‘Western’ and they have profiled themselves as an economic giant. The first generation of these new and good economic times is now old enough to buy their own clothes. We believe that Li Ning should target on this group because they feel the need to profile themselves and buy certain clothing. If Li Ning succeeds to profile their brand as the modern brand then this group of youngsters will purchase Li Nings’s products. In addition this first generation ‘economic boomers’, Li Ning should also target the larger cities. We think that Li Ning should first expand in China and countries surrounding China but not yet making the giant step towards Europe or America. Li Ning should first open more stores in more promising cities such as Shanghai and Beijing and profile themselves in those areas. <br />After anaylyzing the countries which are surrounding China, we came to the conclusion that Indonesia is a very promising country to invest in for Li Ning. There are a couple of reasons for this. First of all, badminton is very popular in Indonesia. This is perfect for Li Ning, as badminton is one of their products. In addition to this, the economy of Indonesia is proven to be very promising for the upcoming years. They have an expected growth of 5,5% in 2010 and 6% in 2011. These are very promising figures for Li Ning. Not only is the economic forecast of Indonesia very good, they have also suffered the least of the economic recession. These factors make Indonesia a serious option to be our new investment market and where we can expand our brand.<br />8.3Positioning<br />As stated before the market in which Li Ning operates is a highly competitive and a very large market. There are a lot of companies offering the same sort of clothing so Li Ning needs to differentiate themselves from their competitors. They can do this by having a unique selling proposition. The products of for example Nike and Adidas a more or less the same so Li Ning needs to emphasis on the fact that their products are truly different from the products of their competitors. They can do this by showing the public that they are cheaper then Nike and Adidas but that the quality of their products are more or less on the same level. In addition to that they need to position themselves to the young public as being the ‘coolest’ sports-brand which is around.<br />In the Indonesian market, Li Ning will have hardly any competition of Nike and Adidas when it comes down to the badminton area. Nike and Adidas hardly operate in this segment so it’s a golden opportunity for Li Ning to position themselves as a badminton brand in Indonesia. As stated before, badminton is Indonesia’s number one sport and with a population of 228 million, this is potentially a very interesting market. <br />Strategy <br />Mission<br />According to Li Ning’s website, Li Ning’s mission consists of inspiring people with the desire and power to make breakthroughs. Their vision is becoming a the world’s leading brand in the sports goods industry. The core values are integrity, WE culture, dream, commitment, achieving excellence, consumer orientated and breakthrough. <br />We believe that this mission has to be adjusted. It is true that China has a collectivistic culture but the middle class youngsters (influenced by Western societies) want to obtain their own identity. For instance, Chinese youngsters (ME generation) want to differentiate themselves in a country with 1.3 billion people. Their income has risen enormously the last couple of years and they are able to afford luxurious products in contrast with their parents. <br />The new mission should become something like this: Inspiring people with the desire and power to make breakthroughs while expressing your own identity. <br />Their vision should be slightly adjusted as well. While leading companies such as Nike and Adidas are dominant in the Western Market, it is of vital concern to obtain a dominant position in the Asian market for Li Ning where the economies are rapidly expanding (ASIAN Tigers). Li Ning should focus on being the leading brand in Asia.<br />The same mission and vision applies to expansion in Indonesia as China’s influence is partly responsible for the Indonesian culture and thus both countries share similarities concerning culture. <br />Goals<br />In order to fulfill the mission, Li Ning must pursue the following goals:<br />Ensuring that the customers receive the highest quality against an affordable price. <br />Ensuring that every region and country gains it own approach. Many Western brands are having trouble when penetrating the Chinese as they use the same model in Western countries which makes it very difficult. Also, remote regions could be approached by offering the ability to order online.<br />Expanding to other Asian countries, such as Indonesia which is experiencing rapid economic growth. <br />To project the core values which helps people to differentiate in a country with a mass population. This could be achieved by producing clothing and shoes designed by famous artists which can be sold as limited edition in a limited quantity. Li Ning should also offer the chance to the people to design their own products (see: NikeID). <br />Sustaining brand awareness by continuing to sponsor sport teams and events. In China and Indonesia.<br />Becoming the leader in innovative sport solutions in China and Indonesia. <br />Grand strategy<br />External growth can be obtained by expanding into remote regions of China and other Asian countries which offer a lot of opportunities. In Indonesia, badminton and football are the two most popular sports. It is advisable to acquire the sport brand League (http://www.league-tm.com) as League sponsors several football teams in the highest division of the professional footballers. League also offers badminton merchandise for professional players. By acquiring League, Li Ning obtains a customer base which is loyal to League and obtains their distribution network. Indonesia consists of 20.000 islands so it comes in handy to have an existing distribution. Besides Li Ning could open flagship stores in Indonesia which make use of the newly obtained distribution network. It is also possible to create a joint venture with League in order to access their distribution network in return for Li Ning’s technology. However, conflicts could appear about how to split the pie and eventual mistrust about patents and so on. It is easier when Li Ning has control about League’s operations. By acquiring League, Li Ning will also receive more knowledge about the local markets.<br /> Internal growth will be achieved by developing new innovative (customizable) products which are aimed at individualistic middle class youngsters. <br />By exploiting the core competencies, which is Li Ning’s experience and knowledge of the Chinese market (different values) and Li Ning’s distribution networks, Li Ning differentiate itself from its competitors. Li Ning’s advantage is very vital as Li Ning has adequate knowledge of the Asian culture which has a huge impact on for instance the buyer behavior process. <br />Around these core competencies, a strategy needs to be build. It is advisable to implement a transnational strategy combined with a multidomestic strategy. Each country, city and/or region involves their own tailored (customizable) products as the differences among Asian countries (even among Chinese regions) are very significant. But still, global integration should be achieved as well to some extent thus Li Ning should use identical components in the standardized products to hold costs down.<br />Corporate strategy<br />Acquiring new local sport brands in surrounding Asian countries if possible<br />Offer franchise opportunities to other Asian countries.<br />Business strategy<br />Introduce the possibility to order online for remote regions.<br />Acquire (or gain partnerships) with companies in other Asian countries to obtain excellent distribution networks. <br />Products will be aimed at individuals.<br />Products will become customizable to some extent and some products will be customized by famous artists which will be very limited. <br />Functional strategy<br />Manufacturing process should allow customers to customize their own clothing and shoes to some extent (like NikeID).<br />The level of R&D should be intensified. Li Ning should test their products with a select group of customers. In addition, Li Ning should use recycled materials in their products as China is the number one polluter in the world. <br />Implementation<br />The strategy will be implemented via changes in:<br />Increasing the amount of stores by franchising<br />Acquiring other Asian brands to increase distribution channels in Asia. <br />Investments in R&D<br />Involving customers in the R&D process<br />Information systems <br />Focus on individuals<br />Objectives<br />Short-Term (1 year)- Increase revenue by RMB 550,000,000.- Reduce the amount of business which Li Ning has in China from 98,8% to 90%. - Gain 10% market share in Indonesia. - Gain 10% market share in China’s first-tier cities Beijing and Shanghai. Long-Term (1-3 years)- Increase revenue by RMB 2,000,000,000. - From the total amount of business Li Ning has, at least 25% should be abroad. - Gain at least 35% market share in Indonesia- Gain 30% market share in Beijing and Shanghai. - Gain a footstep in the basketball and football segments with a 15% market share.<br />Marketing Mix<br />Product<br />As already concluded in the internal analysis, Li Ning’s products are off high quality. The quality of their products are comparable to products from Nike and Adidas for example. Moreover, Li Ning invests a lot of time and resources in research & development, This results in an extensive product line. We want to make sure that the quality stays at this high level and that R&D remains just as important as it is now. In this manner, Li Ning makes sure they stay competitive and push their brand forward. This is a must when competing with brands like Nike & Adidas. <br />In Indonesia we will focus our attention on Badminton sports wear, as it is one of the most popular sports within the country. Moreover, Li Ning already has a lot of experience in this type of product, in China itself it is an important segment as well. <br />Price<br />Li Ning pricing strategy is very competitive, as the prices are below those of their main competitors. However, For the chinese domestic market it is still quite expensive. Nevertheless, we do not want to change it, We think when We will lower the price our brand image will be damaged and customers might think we lowered the quality as well. Besides that our current profit margin is around 9%, this is a profitable margin and needs to stay unchanged. We do not think it is wise to increase the price as well as we than might lose our competitive advantage with reference to Adidas and Nike. Moreover, Li Ning also owns the Z-do brand which covers the lower end of the market. We will apply the same pricing strategy in Indonesia. Li Ning will target the higher end of the segment.<br />Place<br />To obtain a bigger market share and increase our sales Li Ning has to expand its market. This will be realized by also selling Li Ning merchandise in remote regions of China. At the moment, most of Li Ning’s stores are in the east of China in cities like Beijing and Shanghai. By opening stores in the big cities in the north, west and south parts of China we can gain a larger market share. The new stores will be placed in the following cities:<br />North: Harbin, Shenyang<br />West: Urumqi, Lhasa<br />South: Guangzhou<br />(map with the biggest cities in China)<br />Besides opening new stores in China, we will also open a few outlets in Indonesia. These will be mainly on the island Java where in the largest cities of Indonesia are present: Jakarta, Bandung and Surabaya. When we have established 20% market share we will expand our stores to Sumatra and Kalimantan.<br />We also acquire the sport brand League which is already active in Indonesia. This gives us the advantage of an existing loyal customer base and a distribution channel. League is active in over 10 major cities in Indonesia which are spread across the country.<br /> <br />(map with the biggest cities of Indonesia)<br />The new stores in China and Indonesia will be placed in shopping malls where there is a large amount of middle class youngsters present. These people are the most influenced by Western societies and want to obtain their own identity. They are also able to afford luxurious products in contrast with their parents, and are often more into sports and exercise. <br />Promotion<br />In the domestic market, Li Ning promotes itself by sponsoring several teams at the Olympic Games and the founder of Li Ning, Guangdong Li Ning, was a very famous athlete in China. So when people see the name of Li Ning they think of this person. This increases the brand value of Li Ning. Not only do they advertise in the Chinese market, they also sponsor a couple athletes in Europe and in North Amercia. They have sponsordeals with players of the NBA in the USA and with football players who earn their money in the English Premier League. When Li Ning expand their brand into Indonesia they need sign new athletes. Of course these athletes need to be big badminton stars, as badminton is a very popular sport in Indonesia. Markis Kido and Hendra Setiawan have won a gold medal at the Olympic games in Beijing. Not only should they try to sign contracts with these superstars in Indonesia, they also need to approach Rudy Hartono. This man is a legendary badminton player in Indonesia. If they can convince him to wear and to promote Li Ning sports clothing, then young talents will hopefully also start wearing Li Ning as they look up to their big hero. <br />Budget<br />Marketing Budget Plan Li Ning (RMB)Last updated:24-5-2010   201020112012Personnel Salaries, wages2.935.4152.935.4152.935.415Benefits   Payroll taxes293.548293.548293.548Commissions and bonuses   Personnel Total ¥ 3.228.963,71 ¥ 3.228.963,71 ¥ 3.228.963,71  Market Research   Primary research6.827.500  Secondary research   Library management   Market Research Total ¥ 6.827.500,00 ¥ - ¥ -  Marketing Communications   Branding   Advertising20.482.50010.241.2506.827.500Web sites3.413.750232.135232.135Direct marketing   Internet marketing   Collateral   Press relations   Public relations   Analyst relations   Events34.137.50034.137.50034.137.500Marketing Communications Total ¥ 58.033.750,00 ¥ 44.610.885,00 ¥ 41.197.135,00  Channels   Channel communications and training   Channel promotions and incentives   Channel commissions/bonuses   Channels Total ¥ - ¥ - ¥ -  Customer Acquisition & Retention (CAR)   Lead generation   Customer loyalty454.560.000454.560.000454.560.000CAR Total ¥ 454.560.000,00 ¥ 454.560.000,00 ¥ 454.560.000,00  Other   Postage8.193.0008.193.0008.193.000Telephone   Travel   Computers and office equipment   Other Total ¥ 8.193.000,00 ¥ 8.193.000,00 ¥ 8.193.000,00 Total Marketing Budget ¥ 530.843.213,71 ¥ 510.592.848,71 ¥ 507.179.098,71 <br />Salaries are based on five marketing employees (including the marketing manager) who are hired to execute this marketing plan<br />Primary research will be conducted to discover the latest trends in China and Indonesia.<br />Advertising in the Chinese market (see promotion).<br />Websites will be created in order to offer the ability to order online.<br />Sponsoring top athletes worldwide at famous events such as the Olympic games and badminton tournaments<br />Li Ning should invest in R&D as Li Ning wants to become the innovative leader in Asia. <br />Li Ning should invest in postage as the ability to order online demands special packaging for transport.<br />In addition, League TM will be acquired in Indonesia. The value is estimated at 68275000 RMB. <br />Recommendations to the decision maker<br />The decision makers of Li Ning have to decide over some very important decisions. After doing intensive research of the strengths and weaknesses of the brand Li Ning, it’s competitors, the market they operate in and what the future potentially holds, we have come with a couple of conclusions which hopefully can easy the decision making process.<br />The most important decision which Li Ning faced was whether to expand their market towards Europe and the USA or to operate in the Chinese market and in the countries which are located in the South of Asia. We came to the conclusion that Li Ning is doing extremely well in their domestic market. The Chinese economy has been booming for the last decade and Li Ning is gratefully taking advantage of this. But there is more than just their own country. They have tried to open a store in Maastricht in The Netherlands, but this was not successful at all. We think that Li Ning needs to try to expand into a country near to China. There are several reasons for this. First of all, people in the South-East part of Asia are familiar with the brand Li Ning so they will be more likely to buy the clothing of them. In addition to this, Li Ning has a lot of knowledge about the Asian culture and this plays an essential role in the buying process of the customers. Of course not any country in South-East Asia will be successful. We need to expand into a country which has a strong economy and in which the sports running and/or badminton are popular as these are the main sports for Li Ning. The country which complied with these demands is Indonesia. They have a good economy but more important, the number one sport is badminton. There are 228 million people living in Indonesia so this market offers great potential. The price strategy in Indonesia will remain the same as in China, meaning that Li Ning will operate at the higher end of the segment. This will be perceived by customers in a positive way and they will believe that we offer a higher quality of product. Indonesia consist of 20.000 island so it will come in handy to create a joint venture with League. By doing so, Li Ning will have access to a customer base which will make it easier to attract important badminton players which will promote Li Ning clothing. <br />Not only should Li Ning expand to Indonesia, they also need to gain more market share in the first tier cities. We believe that they can obtain this by making more advantage of their very impressive distribution network and their knowledge about the Asian culture. Nike and Adidas are investing intensively into cities such as Beijing and Shanghai. But Nike and Adidas haven’t been operating in the Chinese market as long as Li Ning has done so. Therefore, the knowledge and as stated before, the distribution network, should help Li Ning to gain a larger market share in the first tier cities. <br />To conclude, Li Ning isn’t doing anything wrong. The facts and figures in the Chinese market are simply astonishing. But there is more than their own domestic market and hopefully they can expand into Indonesia and then on the long run become one of the leading sports-brands internationally<br />Source List<br />Internet<br />Fibre2fashion, www.fibre2fashion.com <br />IMF, www.imf.org <br />Jingdaily, www.jingdaily.com <br />Lining, www.lining.com <br />Tutor2u, http://tutor2u.net <br />Wikipedia, www.wikipedia.com <br />Worldbank, www.worldbank.org <br />Books<br />Management and Organistion, Daft <br />Marketing, an introduction, Kottler & Armstrong<br />Appendices<br />Individual reflections<br />Thomas van Bloppoel<br />This was the last export project case which we had to do in this group. I believe that we have come a long way since the first case which we did together. As a team we have grown in the fact that the coorperations between the team members has become much better. Not only have we grown as a team, also individually we have gained a lot of progress. Everybody did a different aspect of the projects and because of this we learned the most out of them. I think that the export project was more succesfull then the FDI project. I very much enjoyed the cases which were of a high quality and had some very interesting topics. This makes it much easier to work with.<br />Jeroen Bos<br />This is the last part of the Export project, actually I think it is a pity that it has ended. I feel this project has, so far, contributed the most in my aspirations for my future career. I think the four different cases were excellent, every case revealed an unique problem. It required all knowledge from previous courses. This project made me realize that i did do learned something on IBMS, it felt good to apply certain models, theory and knowledge without having to consult a book immediately. <br />Working in groups always causes for some problems, if not a lot, and in the first 2 cases we had difficulties working as team. Nevertheless, the third and fourth case went excellent. We really worked together as a group and consulted each other about the best possible solutions. I really love this project, and hope I have to solve some more cases in the future. <br />Jim Colin<br />This time we had plenty of time to make a detailed marketing plan. This was the most interesting marketing plan I ever made as it concern China, which demands a different approach as China has different values in doing business. The same goes for Chinese customers who possess a different buying behavior than Western customers. However, at the same time, this case was the most difficult because of these cultural differences.<br />In addition, teamwork was perfect, just as time management. Everybody did what was expected from them and prior to this marketing plan, we brainstormed together which led to an agreement about the goal of this plan. Everybody was on one line which made it a lot easier as no mistakes were made and all the parts formed a synergy. <br />I hope that this plan will work out. I learned a lot from the export project as it improved my skills to write a marketing plan and I will keep the mistakes I made in mind for the next time. <br />Baseet Qureshie<br />Our project went much better this time, mainly due to correcting the mistakes we made the last time. Everyone was excited about making the final export case since this would be the last time to increase our grades.<br />As soon as we received the case, everyone read it carefully. After that we immediately made a good planning which ensures that no one was making more than another.. Everyone received an equal share of the project tasks and started working on it.<br />Everyone could easily contact each other by internet or phone and ask for help. Appointments were made for difficult to do tasks which required group thinking, like the marketing mix. The co-operation among the team members was superb. <br />Personally this project was a little bit easier than that of Tashas, mainly because of the fact that it was a physical product and not a service. The case was also much clearer with load of information which was helpful for making the assignment. <br />To sum it up, the overall work and action we took as a group was excellent and we made sure that this case would be the best until now. <br />Boyd Scholten<br />I liked this case the most out of all the cases we had. First of all the company sells products which are in my own interest, and that for some reason makes it easier and more fun to read. Secondly, it deals with an issue we haven’t dealt with before, should we internationalize? In other cases we had to think about the product, price and promotion more than what direction the company should head to. At first it looks easier than it actually is. I would say nearly every company with the capability should internationalize, but that’s not how it works, there much more to it. <br />It’s almost too good to be true, but yes, I think we have improved ourselves again. We started planning weeks ahead knowing the case was due at the end of May. Communication went well and everyone did their task. Hopefully this can been seen in the result. <br />