China beer market competetor analysis

mainland mainland China beer trade competetor analysisCHINA BEER MARKET COMPETETOR depth psychologyQuick Over view Aire Breweries plc. Is UK based beer marketing company that been selling premium beers. The company is enjoying fairly good market shargon. The beer market has become pure due to intensive competition and in-line pricing strategies. The Aire Breweries plc. as a part of logical extension decided to enter Chinese market, where beer market is largest in the instauration next to USA.The Strategic Triangle- 3Cs The strategic triangle proposed by Kenichi Ohmae states that any company success in long run pivots around 3factors Corporation, guests Competition. In construction of agate line strategy above factors must be examined thoroughly to arrive at marketing plan.The Corporation Aira Brewries is beer selling company selling beer brands like Hostenbech- European fashion lager beer, San Bernanardo Cameolet- British style dark bitter beer, Ark royal British style dark bitter beer, pot of gold- Irish style dark tough beer with premium price. The brands are promoted through super markets, fashionable markets, Up market city centre bars. The copany has high cost structure and has efficiency as its strength. The Customer The proposed tar consider market China is undoubtedly a large consumer market in the world and beer in particular. The vast spread of consumers with varied languages make MNCs endure the difficulty of convincing Chinese consumers. The competitors In china due to liberalisation policy many MNCs are trying to make a mark in China market. The competition in china Beer markets is very intensive. China market expects to come up with cost effective products where local anesthetic sellers make an edge over MNCs. San Miguel is one of top three selling brands in china and largest selling brand in china. Sabmiller is the world second largest selling has 47 breweries and operating in 13 state of matters of China. Bud Light beer has botto m line structure. Various players include CBR Brewing company inc. china Food beverage company, China preference enterprise ltd., Fomento Economico Mexicano SA de CV, Scottish new castle, Fujian Yanjing Huiquan Brewing group Kirin Brewery Company Ltd., etc. Quick glance at China Economy China has recorded 11.9% gross domestic product growth rate accounts for $ US 3565 billion (USD 1 = RMB7) is a clear indication that Chinese have got fair standards of living and spending power of consumer has been unparalleled Economic Indicators 2007 2006 GDP (RMB trillion)24.721.1Per capita GDP (RMB)2,20016.084Per capita disposable income of urban households13,78611,759Per capita Net income for rural households4,1403,587Table 1 Source National sanction of StatisticsMarket Opportunities threats in China Due to vast population China will crevices great opportunities for potential marketers, provided the market is analyzed and a feasible program is incured. The barriers usually for any MNCs are inadequate market data, inappropriate entry strategy. Poor access to supply chain, vast spread of geographical market, heathen differences etc. It is advocated to distinguish the gap amongst the developed and less developed markets. Uniform marketing strategy is not suitable in view of large market. The beer market is not similar any where it is more of localized driven by local tastes and preferences. It could be defined as pool of regional markets. Domestic players will play dominant section and take maximum market share. But their presence is limited to maximum of 2% of national market. Majority of market share i.e. 45% is controlled by 4 players.Beer Market Scenario in China The high spending level of consumers in China has lead to growth of Beer market in manifolds and ignited by overseas Direct investment. China has now became largest national beer market in the world crossing USA. There were 4 companies in china and has grown to 60 by 2007. McKinsey Global institute has thrown light on newly emerging segment in the recent past- Urban Middle class who has been earning RMB 100000 ($12000) a year became a hot hardlyton to every beer marketer. Table 2Year Million Liters Annual harvesting (%) 200732035,8310.04200833459.424.44200934 904.694.32201036,371.42 4.20201137.860.594.09 Source http//www.globalbusinessinsights.com/content/rbaa0012m.pdfGrowth of China Population Trends It is a known fact that china is most populated country with 1321 millions as per 31 December 2007 comprise of 51% male 49 percent female. The population size makes china a land of opportunities driven by advanced technology usage while producing.Understanding Chinese Market Risk Element Small Medium enterprise like Aire breweries may need to mobilize recourses to tap the potential of Chinese beer market. In this imagine they have to analyse their strengths weaknesses. Most of MNCs fail because of the poor distribution system and failure to identify a piggy back partner. Mo re over the legal philosophy in china has been very stringent. Unless the marketer study the cultural aspects thoroughly it may lead to chaotic situation. Cultural aspects of China Market Chinese consumers are very patriotic and do practice their finishing meticulously. Due to strong socialistic approach they support local products. Foreign players may suffer from non-acceptance of their fling due to invisible influences of culture which cannot be demonstrated. Law at China The china legal system is very complicated and frustrating to MNCs. The familiarity to china culture will facilitate the understanding of law. It is always better to have a local partner to promote the business and as a part of political risk (i.e. confiscation of assets or blockage of funds) handling mechanism Geographical Segmentation It is wise to adapt Regio-centric approach or Multi Domestic approach to equal vast china market. Here subsidiary in each province of china has to devise their plan to suit the need Preferences of that region. This approach demand to have varied marketing mix with coordinated efforts of other territories. Demographic Profile of Consumers China population (1341 millions male female ratio 5149) has been multi-religious ranging from Buddhism, Taoism, Catholics, Pro renderantism, and Islam, interestingly bridge player business according to their religions and Socio-cultural values. Since ages Chinese companies have been transferring ancestral values to present generation which establish relationships refer to term guan xi. Relations drive the businesses to offer extent of product mix.Distribution of Population income wise Table 3Population (million) Gross National Income (Billion) Low Income251210.20Middle Income266749.22 High Income95549.22Source US census Bureau, World Bank group, McKinsey analysisMarketing Mix Product China has been largest beer market but with antithetical tastes across the nation. 500 ml and 750 ml are most preferred quantities served in bottles cans. The per capita consumption 18 ltrs has not been impressive when compared with USA (84 ltrs) UK (74 ltrs) per capita consumption. Aire Breweries need to develop localized tastes along with their premium brands. The test marketing will help company to know the preferences.Price The beer in china market is sold at pretty cheap. 750 ml beer costs 25 cents. Locally made MNC brands Carlsberg and Pabst blue are also sold at fairly cheaper rates. Aire breweries plc., has to adapt bottom line pricing or inline pricing to get acces in the marketPromotion As many languages are used across china, mandarin is widely used language, it is a difficult task to develop a theme while advertising. Few MNCs failed to translate the essence of ad copy lead to waste. It may be advocated to be cautious to understand cultural dimensions while developing ad copy to rural folksPlace (Distribution) The mechanism of distribution of beer products in China takes place via Distributors appointed by Manufacturers in turn retailer super markets. Distributor is focal point from which whole-salers supply the goods. Each distributor holds rights to sell one brands. Wholesalers will buy different brands from different distributors and dispense. Foreign players suffer from effective reach. Joint venture structure of distribution will help to overcome problems. Piggyback model of distribution will sustain Distributor- retailer model. Multi channel mode of distribution will serve the purpose.Marketing Planning outside(a) marketer need to deal with at least both level of uncontrollable uncertainties. The success of marketing program depends on optimal adjustment to business climate in which you are operating. After analyzing opportunities and select the province of china next step is to define the target market. Chinese are got enough disposable income and have been accepting beer as food beverage. Target market will give a direction to develop marketing mix and total number of potential consumers approximately. Aire Breweries should have good local partner to action marketing strategy and extend support to reach target market. The price and promotion campaign need to be devised according to local practices. Entry system Once the market profiling is done, it is always good to enter in to the Chinese market through a joint venture. For many years, the Aire Valley Breweries plc, a UK company focused its marketing effort on premium-priced products. As beer market is growing at good rate, it is high time to get in to China market with constructive marketing strategy. A Joint-venture with local partner will offer ease in operations procurement of recourses, recruitment and handling beaurocratic issues. The local partner knowledge on competition, language, culture and business systems can influence the government policy. Conclusion China is very potential because of vast population but high levels of risk has been demonstrated.Aire breweries may take assistanc e of local marketing research organisation to seek first hand information for political socio-cultural aspects. ReferencesKenichi Ohmae, (1990), The succeeding(a) global stage available at http //en.wikipedia.org/wiki/3c%27s_model Jeffrey Hays (2008) wine beer in China available at http//www.factsanddetails.com/china.php?itemid=142catidNews Report (Dec 2006) Beer market in china http//www.globalbusinessinsights.com/content/rbaa0012m.pdfNational Bureau of statistics of China, available at http//www.chinaknowledge.com/market/book-Starmas international Business consultants (2009) China trends available at http//www.starmass.com/china_review/economy/_overview/china_macroeconomic.htmChina Knowledge Bureau report, (2008) available at http//www.chinaknowledge.com/market/book-china consumer.aspx?subchap=1content=3Chinese Beer Industry Report, (October 2007) Koncept Analytics Publishers, UK available at http//www.reportbuyer.com.food_drink/alcoholic_drinks/beer/chinese_beer_industryBeer M arket in china (2008), A Market analysis of Aroq Ltd. make at UK available at http//www.justdrinks.com/store/product.aspx?id=68150Jeffrey Hays (2008) wine beer in China available at http//www.factsanddetails.com/china.php?itemid=142catid10. Richard Benson-Armer, Joshua Leibowitz, And Deepak Ramachandran (1999) Global Beer Whats On Tap? available at https//www.mckinseyquarterly.com/ghost.aspx?ID=/Global_beer_Whats_on_Tap_321News Report, (December 2006 ) Beer market in China http//www.globalbusinessinsights.com/content/rbaa0012m.pdfDon Lee, (29, April 2009), China relaxes business regulations, Los Angeles Times, available at http//articles.latimes.com/2009/apr/29/business/fi-chinaregs29Charles W. L Hill, 2005, 5th Ed, International Business, Tata McGraw-Hill, New Delhi, India p- 166Philip R Cateora, John L Graham (2008) 3ed, International Marketing, Tata McGraw-Hill, New Delhi, India p26InfoPacific Development Inc. (2009), Kompass, China http//www.chinatoday.com/general/a.htmProf. J iangang (Jim) Dai Prof. Chen Zhou (March 2008), Beer Distribution In China, gallium Institute of Technology, available at http//www.scl.gatech.edu/research/china/beerreport2008.pdfChina Business Intelligence analysis available at http//chinabizintel.com/industry-updates/several-major-problems-in-chinas-beer-market.html