To come up with a decision to the whether enter the Greater China Market or not we decided to approach the case with a SWOT analysis. Strengths NutraSweet is an artificial sweetener that is one of the most recognized brand names in the United States and in the world. NutraSweet’s earnings per share is $ 6. 36 and with huge capitalization and investments in diverse products. Stacey has the approved budget of $ 500,000 to market NutraSweet in China.
NutraSweet has the flexibility on how to position their product in terms of functionality, or either as sugar substitute or health product for diabetics. Weaknesses The research conducted towards the Chinese consumers may not truly reflect the real sentiments of the consumers towards NutraSweet. NutraSweet has not decided on building its own distribution system and may rely on foreign agents for distribution. NutraSweet is more expensive than ordinary white sugar. Opportunities China is a big market and can provide higher profitability to the company.
China is the second or eighth largest economy in the world; depending on how it was gauged. There is a perceived consumers’ infatuation with Western brands. Chinese maintain healthful lifestyle so the potential for NutraSweet to launch their product in China is strong. Threats Sugar is a common household purchase as a sweetener and has been part of Chinese households for decades. Culture dictates that there might be difficulty in replacing traditional use of sugar with NutraSweet. The Chinese market is so diverse and it is difficult to come up with a general characteristic to define them.
Artificial sweeteners are known by history of skepticism for saccharin and potential health hazards. There is difficulty in attracting and retaining local employees and as such, NutraSweet is having doubts in investing into training their marketing and sales personnel for fear that the employees would not stay long in the company. There are only very few foreign agents that operate in China. Sugar use and consumption levels differed among 3 key markets –Shanghai, Guangzhou, and Beijing. Arthur Andersen survey in China showed that most joint ventures from food and drink were not profitable.
Most MNCs in China are unprofitable despite substantial growth. Majority of the Chinese are considered “flat-bellied” and don’t see the need for a diet regimen. The Chinese culture also dictates that they are not that concerned with their teeth, hence they don’t have that fear of tooth decay. The company should enter the Greater China market as a niche product for consumers with a medical need. The company cannot delay its entry in the China market, especially with factors such as an average of 10% economic growth, a quickly emerging middle class, and a high possibility in consumers’ increase purchasing power.
Postponement of entry may mean higher costs in the future and although the company will not immediately profit from the venture, research showed that companies who entered the market 5 to 10 years ago were doing best. The knowledge gained from market entry will allow NutraSweet to sharpen its future strategies. Pros The successful experience in establishing medical awareness in Hong Kong may be applied to the Greater China Market. Entering the Greater China market through the three key cities will provide a better knowledge of the overall Chinese market.
A natural market consisting of diabetics and obese customers already exist. Hospital stores and drug dispensaries do not have the bargaining strength that retailers have. Product information campaigns will be facilitated by health professionals who will easily understand and appreciate the product’s benefits. Promotion to medical professionals through associations will not need as much cost as a nationwide mass-market campaign. A $ 2,010,526. 31 in breakeven sales seems very feasible in the Chinese market.
Cons The Chinese tend to be slim and had historically not been preoccupied by tooth decay. ? SHORT-TERM The Chinese consumers’ attraction to brand names, especially the number 1 in any category gives NutraSweet an opportunity to establish itself as a first mover in the medical aid products under a new category of sweeteners. The company will launch a product information campaign for medical professionals and will also tap their associations. Associations of diabetics and obese consumers will also be tapped.
The company will focus on relationship building with the medical industry. Since poor dental health is a problem in China, the company may also create an awareness drive on the ill effects of sugar on the teeth to lay the foundation of need awareness. The product will be packaged in sachet form with global brand and American image prominent on the sachet to appeal to the consumers’ preference for American brands. The company will capitalize on the convenience of bringing the sachets anywhere with you.
The medical industry will be given free samples of the product. The doctors will be taught to promote daily use of the product, with sweetening of milk and coffee or hot drinks as one of the more common purposes. Consumers will be taught to use the product in cooking through the provision of free recipe booklets and cooking demonstration classes. The product will be distributed in the three key cities of Greater China, namely, Guangzhou, Shanghai, and Beijing, where the medical industry is more developed compared with the other cities.
The company will create its own distribution structure. The product will use the distribution channels of hospital stores and drug dispensaries. Since the focus is on niche marketing, the product will still be sourced from the U. S. plant. LONG-TERM The long-term goal will be to mass market the product in Hong Kong and Taiwan, and use the learning’s from those markets to penetrate the market Greater China. Establishing distribution networks in the two countries will be easier, given the favorable business environments. In Hong Kong and
Taiwan, the product will be repositioned as a healthy family lifestyle food, targeting the affluent, health and weight conscious consumers. Aggressive promotion will be pursued, such as print and media ads, and the employment of product endorsers, and store promotions. Consumer awareness and education will be the focus of the campaigns.