4. Luxury Amber Chopsticks
Reasons to success
•Localization of product to suit
the market (Eg. Dragon
engravings)
•Increasing affluent market
creates a demand for exquisite
luxury products
•Niche market- Need not
compete head on with the
Chinese competitors in terms of
price
•Russia has an upper hand in
controlling the supply of amber
5.
6. Country report: China
Country statistics:
Population:
1.3 billion
GDP (PPP):
$11.3 trillion
9.2% growth
10.5% 5-year compound
annual growth
$8,382 per capita
Unemployment:
6.5%
Inflation (CPI):
5.4%
FDI Inflow:
$124.0 billion
Country facts*:
• Chinese GDP could overtake the U.S. as soon as the early 2020s.
• By 2025, China will build 10 New York-sized cities.
• China already consumes twice as much steel as the US, Europe and Japan
combined.
• There are already more Christians in China than Italy, and China is on
track to become the largest center of Christianity in the world.
• 50% of counterfeit goods come from China.
* Based on http://www.businessinsider.com
8. Reasons to choose SWOT as a
marketing tool
• Combines external environment with internal
one – helps to understand how does selected
product fit selected market
• Reveals weaknesses of the product – helps to
understand:
– whether product can be modified to have success
on the selected market or not;
– If yes – provides the direction and ways of product
modification to fit the market better
9. 1. Meaningful as a present
2. Uniqueness: each piece is different from the other
3. Proximity to resources
4. Product is exquisite and alluring
5. A luxury product as it is made solely from amber
6. Chopsticks are the main utensils used by the Chinese
consumer
7. Red is attractive as it is a symbol of prosperity for
the Chinese
SWOT -S
10. 1. Fragility
2. Low compatibility of usage as cutlery
3. Lack of market expertise
4. Lack of brand
5. No distribution channels
SWOT -W
11. 1. Social networking and good relationship are of great
importance
2. China is projected to become the largest economy by 2027
3. Largest economy in terms of purchasing power
4. Growing affluence with 1.6 million well-off families in
China in 2008, the figure is estimated to reach four million
by 2015
5. Quick & booming urban development, rising foreign & local
investments, regional cultural influences
6. Most populous nation (Approximately 1.3 billion)
7. A strict hierarchy in the Chinese business culture
8. Popularity of chopsticks as cutlery
SWOT -O
12. 1. Chinese rules and regulations are not so transparent
2. Communist party exercises absolute power over legislation
3. Tendency of Chinese competitors to compete head on with
global players on price
4. Existence of amber products imitation
5. Existence of Chop sticks in porcelain, jade and other form
of precious resources
SWOT -T
13. 1. S3O3O6: Entering all the big and growing
cities due to enough supply and high demand
2. S3O4: Creation of new products, future
possibility to widen product assortment
3. S1O1: Promotion as a luxury gift
S-O
14. 1. W2O8: Possibility to promote as cutlery
2. W1O8: Product modifications (partly amber)
3. W4O5: Create a strong brand name
4. W3W5O3: Conduct market research, use
consultants, establish partnerships to get
local knowledge
W-O
15. 1. S7T2: Stress on the red color
2. S3T3: Skimming strategy to compete
3. S2T4: Make an emphasis on quality and
uniqueness of the product
S-T
16. 1. W4T4: Lack of strong brand is weaken by
existing competitors
2. W3T3: Existing imitating products could
become more attractive on price
3. W5T5: Existing products become stronger
with better distribution
W-T
17. “USED” stage –U
Use of strength
SWOT Items under
consideration
Consequences expected Actions / Counteractions
Demand for luxury products The niche is open for new
companies
Penetrate the market with
goods in demand
Uniqueness (Product is
Exquisite and Alluring)
Not many substitutes made of
natural materials
Do not allow imitations on the
market
Proximity to resources Relatively low costs of
transportation
Production facilities near the
resources
Chopsticks are the main
utensils used by the Chinese
consumer
High demand in every day life
and low competition from the
side of producers of other
utensils
Research the special form of
chopsticks
Red is attractive as it is a
symbol of prosperity for the
Chinese
Production in red colours is in
better demand
Infuse production with red
colours
18. “USED” stage –S
Stop weakness
SWOT Items under
consideration
Consequences expected Actions / Counteractions
Fragility Losses in case of unsafe
transportation
Special package to be applied
Lack of market expertise Lack of partners and
distributors
Accumulation of experience
from different sources
Lack of brand Low sales, low brand
recognition from customers,
mistrust
Research brand loyalty, create
strong brand image or acquire
an existing one
No distribution channels Problems with product
placement
Extend the business network
19. “USED” stage –E
Exploit opportunity
SWOT Items under
consideration
Consequences expected Actions / Counteractions
Social networking and good
relationship are of great
importance
Relationship-oriented
business
Establish good relationships
with suppliers and partners
Largest economy in terms of
purchasing power
Luxury goods are in demand Opportunity to rise prices
Most populous nation
(Approximately 1.3 billion)
Big market, diverse tastes Increase the production and
range of products
A strict hierarchy in the
Chinese business culture
No easy way to compete Research Chinese cultural
differences
Popularity of chopsticks as
cutlery
High demand Capitalize upon this popularity
20. “USED” stage –D
Defend against threat
SWOT Items under
consideration
Consequences expected Actions / Counteractions
China rules and regulations
are not so transparent
Hidden rules of the game Alliances and JV with Chinese
companies
Communist party exercises
absolute power over
legislation
Uncertainty in legislation,
rules may change in a while
Alliances and JV with Chinese
companies
Tendency of Chinese
competitors to compete head
on with global players on
price
Price dumping Counteract with exclusivity of
products
Existence of amber products
imitation
Low quality products with
lower prices
Make an emphasis on quality
and uniqueness of the
product
Existence of Chopsticks in
porcelain, jade and other
form of precious resources
Loss of market share, profits Capitalize upon cheaper
resources (amber)- strong
competitive advantage,
21.
22. Direct export: leave
Direct
export
via Internet
Direct export
via
middleman
Transmutation
• No expertise on Chinese market (knowledge of local
customers)
• Large cultural difference (doing business in China)
• Language difficulties
WHY?
23. Contracting with middleman
Advantages Disadvantages
• Possibility to concentrate
resources on production
• No need in directly handling of
export processes
• Fast market access
• Relatively low risks of failure on
the market
• Little financial commitment
• Less control over distribution
(relatively to direct export)
• Inability to learn how to operate
overseas
24. Type: consignor
Choosing middleman
• obtains product information
• responsible for product selling
Advantages
Compensation
• 20% of the retail price
• retain ownership of the goods
• control of sale price
25. Further internationalization
• Access to local managerial practices
• Access to the distribution channels
• Knowledge of market peculiarities
• Avoiding problems with unfamiliar legislation
• Reducing misunderstandings arising from cultural differences
Entering a joint venture with a local partner
26.
27. Product description
• Market niche: luxury eating ware
• Basic need fulfilled: unusual present
• Packaging: expensive box with holder for
sticks to be installed on the shelf
• Price on Russian market: 60€
28. • High price, comparable with other luxury dishes
• Cost oriented:
Russian price ($60)
+ transportation costs ($10-15, fragile, small
quantity)
+ import duty (luxury goods: 15-25%)
+ VAT (17%)
+ amber is more valuable resource in China
+ profit margin (50%, skimming pricing)
+ 20% to consignor
= $200 for set of 2 amber chopsticks
Price
29. 1. On-line sales
2. Gift & souvenir shops
3. Luxury dishes stores
4. Brand-own stores
Place
30. Scale of Development
Megacities, affluent,
hyper-urbanised,
melting-pot of
international and
regional cultures.
Smaller cities, slower
urban development,
industrial regions,
regional cultural
influences
Quick & booming urban
development, rising
foreign & local
investments, regional
cultural influences
{Target}
Place
31. • Company web site (catalogs, customer reference
stories)
• Context advertisement (luxury products, luxury
dishes, Russian souvenirs)
• Social Media (Facebook, Twitter)
• Print advertisement (luxury products reviews, ad in
fashion magazines)
• Trade faires and exhibitions
• Developing of recognisable brand logo
Promotion
32. Action plan – 1st step
Objective: get to know the new customers purchasing
habits, introduce the brand to the market
Tools: cheap online sales, collecting customer feedback,
sending small prizes or discounts for future rebuy, social
media promotion
Sales via internet
33. Objective: entering the market without big investments
Tools: selling products to souvenir and dish shops,
POS-materials, printed advertisement
Action plan – 2nd step
Sales through intermediaries
35. 1. Reasonable to enter - high potential on the
market
2. The greatest weakness could be overcome
3. Entry mode – choosing a middleman
4. Promotion strategy: developed distribution
channels, creating of brand name
Conclusion
