Slide 1 - PLU - Pacific Lutheran University_ academically rigorous

							     Justin Kelly
Jacob Augustine
  Ashley Fiorini
Company Profile
 Manufactured in Britain
    Confectionary capital of the world
 Export high-quality candies, namely chocolates from
  UK to China
 Branded under the “Drizzle Chocolates”
China
 1.3 billion people
 Majority of population in the eastern coastline
 Political risk:
    Chinese communist party
 Legal system: Civil Law
    Intellectual property rights
China’s Culture
 Strong family importance
 High-Context
 Harmony
 Face
 Guanxi
Demographics
1.    Born between 1946-64
2.    1965-76; during China’s development
3.    Post 1976; have grown up in increasingly wealthy
      and stable environment
     -Group 1 and 2:
         -price sensitive and conservative
     -Group 3:
         -consumption-oriented; experiment, style conscious,
         sensitive to advertising
     Target Market: Group 2 and 3
Location
 Start in Chengdu and satellite cities
    Escape higher cost (e.g. Shanghai)
Market Overview
 Competitors:
   Ferrero Rocher of Italy
   Lindt of Switzerland
   Leonidas of Belgium
   Guylian of Belgium
   Cadbury Schweppes
   Wm. Wrigley Jr.
   Nestle SA
   Mars Inc.
   Domestic Manufacturers
Market Overview
 Growth
    10% annually
    52.4 % chocolate consumed in the Chinese market used
     as gifts               Chocolate Sales in China
                 $1,400,000,000

                 $1,200,000,000

                 $1,000,000,000

                  $800,000,000

                  $600,000,000

                  $400,000,000

                  $200,000,000

                            $0
                                  2008          2012
Strategy
 Product
   Core Component: chocolate
       Streamlined operations; easy to add flavors, designs, nuts, fruits
   Product diversification (Seasonal)
   Specific Packaging Requirements:
       Clear statement of the type of food
       Brand name
       Trademark
       Manufacturer’s name and address
       Country of origin
       Ingredients
       Date of production
       Sell-by-date
   Packaging
       Bright colors
       Holiday coordination
       Metallic materials
       Avoid white (symbolizes mourning)
Promotion
   Television ads
     http://www.youtube.com/watch?v=RhiSa-
      WW9kU
   Magazines
   Social Networks
   Incentives for repeat customers
   Partnerships with MTV, CCTV, etc.
   Personal selling
   Focus on romantic and affluent lifestyle
   Target significant holidays
Strategy
 Significant Target Holidays:
Holiday:                      About:                                            Marketing Notes:
Chinese New Year                 A.k.a – Spring Festival (First day of lunar      Use red & gold
                                  calendar)                                        Integrate peach blossom designs
                                 Most important Chinese holiday                    (symbolizes good fortune)
                                 Shops decorated                                  Mandarin-like fruit (symbolizes
                                 Celebrations go 3 days                            gold & money)
Mid-Autumn Festival              Occurs 15th of 8th lunar month                   Market moon-cakes significantly
                                 Second most important festival
                                 Big meals eaten; gifts given
Valentine’s Day (Chinese) –      7th Day of 7th month                             Market gifts in groups of 9, 11, &
     Double Seven Day            Couples give gifts                                19
                                                                                   Never group things in 4’s
                                                                                    (symbolizes death & misfortune)
Valentine’s Day (Western         Celebrated similar to Western with certain       Same as Double Seven day
                                  customs
Lantern’s Festival               Occurs on 15th day of first lunar month          Decorate shops with lanterns
Christmas                        People shop, go to movies, give gifts            Sometimes celebrated similar to
                                 Sometime celebrated similar to Western            Valentine’s Day; couples give gifts
                                  Christmas, not always                             like chocolate
Strategy
 Price
    Higher than grocery store brands
    Target demographics not price sensitive
    High Price = High Quality
    Safety
Strategy
 Place
    Franchise stores
    High-end department stores
    Hotels
    Restaurants
Marketing Problems Foreseen
 Traditional tastes prefer sweets as desserts
    Changes driven by youth and Western influence
 High costs of entrance into large cities
 Strict customs
 Obtaining loans
 Health
    Melamine scares
Distribution
 Mode Selection
   Airline
     Short shelf life and appearance

     Chilled

   Packing
     Cooled storage containers

 Channels of Distribution
   Retailers & Franchising
   Cut out Wholesalers & Middlemen
   Reduce overhead, leverage, proximity
Distribution
        Transfer of goods
    1.     Freight forwarding through London Gatwick Airport
    2.     Arrive at Chengdu Airport
    3.     Goods are transferred to company trucks at airport
           and delivered to warehouse
    4.     Delivered to end retailer through logistics network
           (i.e. Trains---trucks----retailers)
Terms of Sale
 Ownership transferred upon delivery to franchisees
  and all other locations (FOB)
 Receipt of Payment
 Letter of Credit
Documentation
 General Documents           • Chinese Entry Documents
   Commercial Invoice          – Import Declaration Form
   Consular invoice            – Commercial Invoice(s)
   Certificate of Origin       – Bill of Lading
   Inspection Certificate      – Approval document for
   Shipper’s Export              importation of food
      Declaration               – Support for trade agreement
     Export Packing List         being utilized
     Warehouse receipt
     Insurance Certificate
     Bill of Lading
Long-Term Vision
 Expand into hub cities
    (Shanghai, Beijing, Hong Kong)
 Possible alliances (hotels, restaurants)
 IPO
 Private cargo plane
Questions?