Target Market Segments
China’s domestic competition is strong, with over 95% of Chinese preferring domestic beer for most occasions. Increasing acquisition and improved distribution channels continue to increase industry concentration. International competition is also formidable in China, with Germany and Mexico together occupying nearly 56% of China’s total beer imports. As a niche product targeting a certain group of consumers, selecting marketing activities needs to be carefully undertaken in order to better gain market share.
SABMiller entry into the economy will have to formulate achievable marketing strategy, which will necessitate its realization of strategic goals. Some of the key competitors that accounts for at least 63% of the total industry volume include Tsingtao Beer, Zhujiang and Yanjing, China Blue Ribbon, Yanjing, Sie-Tang Lio and San Miguel (O’Guinn et al., 2009). Apart from these locally produced beer brands, some international brands have vested interest in investing in the economy. In order to be relevant in the economy, SABMiller has merged with successful organizations and it has been involved in a series of joint ventures. According to Ferrell and Hartline (2010), merging or acquisitions ensures that the company has a wide capital base, and increases the market share and competitive advantage.
In this industry, customer value plays a key role in harnessing success in the economy. Customers need to be appreciated through providing them with a scheme in which they can participate directly or indirectly on decision making process of the organization. One of the ways is through Frequent Answers and Questions (FAQ). This will ensure the company understands the reactions of the customers. With this strategy, the company has a potential to grow and increase its revenue outlay.
Porter’s Five Forces
SWOT analysis is the key tool in assessing the forces in the market environment. Assessing the external and internal environment of an organization enhances utilization of company’s resources in achieving strategic goals and objectives. Basically, SWOT means strengths, weaknesses, opportunities, and threats.
New to consumers in China
Contains an attractive label
Has a distinct taste
Availability of numerous choices
Convenient for packaging Weaknesses
High prices due to its quality
The shelf life for the product is short
Transportation of glass bottles is expensive; especially during distribution process
The growth of restaurants and bars has allowed consumers to have a wide-scope of products that are to be selected by consumers (Bobik, 2012)
The beer industry is growing and being established in China
Foreign exchange rate is improving
Consumers are experimenting on different brands of beer Threats
Stringent government regulations
Increase in future tax deductions
6. Marketing Mix
SABMiller will be involved primarily with bitters, stouts, and premium lagers. Currently, the sector has not involved bitters and stouts due to the bitter taste and high cost associated with the product. Therefore, premium lagers are highly sought as compared to beers. The alcoholic content is crucial in determining the effectiveness of the product. The management of SABMiller aims at selling products with alcoholic content of between 2.8% and 3.6% (Swinnen, 2011). Apart from alcoholic content, Chinese consumers are concerned with quality of the brand, and SABMiller’s product branding should be appealing to the consumers.
Most of the individuals in China have shifted from rural areas to urban centers. With increase in disposable income, customers have a huge amount of money at the discretion to drink, dine, and shop. Such behavior is affected by the western culture. As such, it is possible to charge a premium price for the product. Charging high premium price enables the company to position its products as premium product. The consumers will understand the competitiveness of the product by competing with global brands like Snow Beer, Carlsberg and Budweiser (Bobik, 2012).
The effectiveness means of distributing the products is either through ‘off-trade’ or ‘on-trade’. In the case of cities like Shanghai and Beijing, the income level of the individuals in this region is high and their spending power is also high (Doole and Lowe, 2008). Therefore, ‘on-trade’ sales will be imminent as the products will be distributed through restaurants, bars, and pubs. The value of the products will be boosted when the products are sold at a niche outlets and when they are sold at a premium. On the other hand, ‘off-trade’ sales will be the best option when transacting in rural settings as the prices of the products can be compromised at the same time competing with domestic and international brands (Swinnen, 2011).
Promotion is crucial to success of a product as the target population need to be aware of the availability of the product in the market. Aggressive advertisement especially through media houses and sponsoring events on major towns such as Budweiser, Yanjing and Tsingtao should enhance production. Sales promotion should be undertaken in restaurants, pubs, and bars in order to enhance their superiority and understanding. With these promotional activities, SABMiller will enhance creation of value and communicate the existence of product in the economy.
The employees of the SABMiller will have to undergo training to ensure that they have excellent interaction with the customers. The need for training is necessary to ensure proper handling of customers to strengthen their loyalty to the brand. This will lead to high level of satisfaction on customers.
The SABMiller will establish its operations in a strategic place where it will be carrying out its brewing activities. The establishment will have state of the art machinery for producing quality and standard products.
The SABMiller has developed system for delivering its products to ensure maximum customer satisfaction. The process of delivering its products to the customers is faster hence, avoiding disappointing the customers through sluggish delivery. In addition, complaints from the customers about delivery of the products to the market are treated with utmost urgency to avoid dissatisfaction from customers.
The SABMiller will partner with distributors in marketing its products. It will engage the distributors through modification of prices to ensure that the products are attractive and therefore, being able to be sold.
Bobik, M. 2012. Entering the wine industry in China: Possible Marketing Strategies, London: GRIN Verlag.
Doole, I & Lowe, R. 2008. International Marketing Strategy: Analysis, Development and Implementation, London: Cengage Learning EMEA.
Ferrell, O. & Hartline, M. 2010. Marketing Strategy, London: Cengage Learning.
O’Guinn, T., Allen, C. & Semenik, R. 2009. Advertising and integrated brand promotion, London: Cengage Learning.
Swinnen, J. 2011. The Economics of Beer, Oxford: Oxford University Press.