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Cheesecake Factory: International Marketing


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Cheesecake Factory: International Marketing

  1. 1. International Marketing (MKT343) Professor Thea Bellos Summer 2012 Anh Thi Van Tran (Anh) Kuan-chieh Huang (Jerry) Piyanuch Kangwankijwanich (Tu) Ting Tseng (April)
  2. 2. AGENDA 1. Missions and Challenges 2. SWOT Analysis 3. Business Concepts 4. Industry Analysis 5. Country Analysis 6. Strategic Marketing Direction 7. Overall Strategic Approach 8. Marketing Mix & IMC 9. Conclusion
  3. 3. Mission In U.S. - 170 restaurants In 2012 - expand to China: Shanghai, Beijing, Guangzhou Challenges To understand Chinese cultures and tastes To follow regulations of commercial TV
  4. 4. SWOT ANALYSIS Strengths Variety of menus Appreciated awards Intensive branches Weaknesses Declining market share Opportunities Growth of food tourism Expanding restaurant industry Threats Rising labor costs Strict regulations Numerous competitors
  5. 5. CONCEPT Business Models Build partnership with locals Maintain CRM Cooperate with government Set positioning as “Premium American Dinning” Key Factors Quality control, venue selection, venue set-up, staff training, innovation, revenues and sales, and market share Risks Heavy debt in China Restrictions of foreign investment: to protect domestic companies
  6. 6. INDUSTRY ANALYSIS Size and Growth Trends Vulnerability to Economic Factors Predict to grow 16.5% annually Increase restaurant revenues: Boost sales (lunch/dinner) Rising household incomes Eat out trend: Many business activities High income, high quality Unstable factors: Global financial crisis High competition in fast food
  7. 7. INDUSTRY ANALYSIS Technological & Seasonal Factors Good event = More competitive For example, the weddings, event planning, and celebration have fully influenced on the fullservice restaurant’s sale. Public holidays and festivals Beijing Olympics Regulatory Issues China regulations Food safety supervision Smoking ban English menu Waste management
  8. 8. INDUSTRY ANALYSIS Financial Consideration Factors influence on industry revenues Wide range of industry Variety size of restaurants Operating costs Raw materials, wages, rent Harsh regulations Risk Analysis Inflation Too strong liquidity growth Over demand Mounting input costs Wages and oil price Natural disasters Increasing vegetable price
  9. 9. COUNTRY ANALYSIS China is one of the world most growing countries Competitive Advantages  Low labor cost  Abundant natural resources  Major leaders of international organizations
  10. 10. COUNTRY ANALYSIS Economic Statistics GDP is growing 8% annually Unemployment in urban areas are decreasing from 4.65% to 4.1% Middle class is increasing from 65.5 mill in 2005 to 80 mill in 2007 The government is resisting external pressures due to country’s benefits of export
  11. 11. COUNTRY ANALYSIS Government/Political/Legal  One-child-family policy: 1.5 bil by 2030  One-party state to control regulations  High budget deficit 1.1% of GDP in 2011 > 1.9% in 2012  Inflation concerns: Rising interest rates  Effects of joining WTO Having relationship with other countries Affecting domestic markets
  12. 12. COUNTRY ANALYSIS Risk Analysis One-party state: Unstable regulations High debt burden: Demand of local government Restrictions for foreign companies Chinese-foreign equity Joint Venture Different kind of costs To educate labors To increase labor costs Corruption: Judicial decisions Contract enforcement Protection of property rights
  13. 13. STRATEGIC MARKETING DIRECTION Marketing Scope Premium full-service restaurant Features both American and Chinese foods Operates in big cities    Marketing Goal Creates & develops brand awareness & reputation Expands all over China  
  14. 14. STRATEGIC MARKETING DIRECTION Marketing Objectives Revenues: $2.2bil / 20% growth rate in 3 years Expands from 3 to 15 restaurants in 3 years Earns 5% of the market share in 5 years Enhances relationship with government, suppliers, etc. Develops new menu items     
  15. 15. OVERALL STRATEGIC APPROACH Target customer Chinese men & women: age 20 - 55, upper-middle income, well-educated, live in big cities Western foreigners: expatriates & tourists   Target competitors Beijing Little Potato Catering Management Chongqing Taoranju Catering Culture Zhongshan Seaport Catering Group China Quanjude Inner Mongolia Little Sheep Catering Chain     
  16. 16. OVERALL STRATEGIC APPROACH Branding and positioning statement Up-scale, casual dining restaurant chain that features Western and Chinese foods. Sales and Channel Strategy The restaurants Website  
  17. 17. OVERALL STRATEGIC APPROACH Market Entry/Expansion Strategy Wholly - owned subsidiary No licensing Partner with suppliers    Core Marketing Strategy Word-of-mouth strategy Buzz, Viral, Social Media, Blog, etc. 
  18. 18. OVERALL STRATEGIC APPROACH Risk Analysis Cultural difference Ineffective marketing communication Intense competition Risk management Being aware of threats Understand and respond quickly Differentiation    
  19. 19. MARKETING MIX Product localization •Cut down items in menu •Add Chinese food •Reduce dish size •Support chefs to join culinary contest
  20. 20. MARKETING MIX Premium pricing 1. Find the highest price target customers could afford 2. Markup on sales > 300% 3. Treat branch managers as salespeople 4. Evaluate work in progress monthly and annually
  21. 21. MARKETING MIX Selective distributions • Traffic malls • Nice scenery: Top roof or corner Quality supply chain • Material Requirement Planning (MRP) to minimize delay • Just-In-Time (JIT) system to keep food fresh • Qualified local suppliers and local distributors to reduce costs
  22. 22. IMC Create awareness of value propositions 1. Use exciting message 2. Execute creative media • Wrap the restaurant • Distribute invitation cards • Spread WOM
  23. 23. IMC Build brand interest and desire 1. Establish sophisticated brand equity 2. Apply PR Marketing • Gift cards for Chinese icons • Editorial advertising • Renren and Weibo
  24. 24. IMC Remind brand values 1. Implement loyalty programs and CRM • Free sampling on birthday • Premium gifts • Member card 2. Focus on interactive marketing • Official website • Mobile phone application 3. Launch CSR plans • Harvest program • Event sponsorships
  25. 25. CONTINGENCY PLAN Best case  Growth rate and revenues: more than expected  Expand to other cities/provinces Second case  Growth rate and revenues: lower than expected  Don’t open new restaurants – Keep 3 restaurants  OR slow down expansion rate Worst case  Fail in Chinese market  Exit Chinese market  Go to other countries : ex. Australia
  26. 26. CONCLUSION  China is a potential market  Cheesecake Factory is developing fast & needs to expand ⇒ Expand to China Earning:  $64 mil. USD annual revenues  & $13 mil. USD annual net income in the 3rd year Required budget for 1st year  $15 million
  27. 27. REFERENCE Berggren, D. (2012, February). Enter the dragon – investment risks in China. Retrieved from China's marketing challenges. (2011, April). Retrieved from http://www.bizcomm Cheesecake Factory. (n.d.). 2011 annual report. Retrieved May 30, 2012 from Cheesecake Factory. (2006, March). Code of Ethics and Code of Business Conduct. Retrieved May 30, 2012 from Cheesecake Factory official website. Retrieved May 30, 2012 from Hoenig, J. (2007). Wise companies prepare for—and minimize their exposure to— risks when investing in China. Retrieved from https://www.chinabusiness Miller, K. (2009). Organizational communication: Approaches and processes. (5th ed.). Wadsworth Cengage Learning. Boston.
  28. 28. REFERENCE OneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource company summary report. Retrieved from OneSource database. OneSource. (2012, May 30). The Cheesecake Factory Incorporated. OneSource corporate overview report. Retrieved from OneSource database. The Cheesecake Factory Incorporated (NASDAQ: CAKE). (2012, May 29). Business Wire. Calabasas Hills, CA. Tan, F. (2011, June). Chinese now spend 41% of their time online on social networks in lieu of news sites. Retrieved from Xia, Z. (2012, January). Chinese regulator imposes stricter rules on TV programming and advertising. Retrieved from