Twin Lotus

BM6806 : International Marketing Management
GROUP CASE STUDY
TERM PROJECT:
A TWIN LOTUS COMPANY – ENTRY TO CHINA
Submitted to
Jakarin Srimoon, Ph.D.
Submitted by
Ms. Napassakorn C. 451-9138
Mr. Wasan Pornjinda 451-9216
Mr. Artid Nataw 462-9107
Ms. Sutana Thangtumrug 472-9152
Mr. Lersan Kenikanont 473-9016
Mr. Suraj Karki 481-9034
Submission date
Aug 26, 2006
ASSUMPTION UNIVERSITY
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Contents
Page
CHAPTER 1: COMPANY AND PRODUCT BACKGROUND 3
SECTION 1 : OUR COMPANY 3
SECTION 2: PRODUCT BACKGROUND 8
CHAPTER 2 : MARKET ANALYSIS 13
SECTION 1 : COUNTRY BACKGROUND 13
SECTION 2 : COMPETITOR ANALYSIS 25
SECTION 3 : SWOT ANALYSIS 32
SECTION 4 : TARGET ANALYSIS 34
CHAPTER 3 : ENTRY STRATEGY 36
SECTION 1 : ENTRY MODE ALTERNATIVE 36
SECTION 2 : CHOOSING THE ENTRY MODE 41
CHAPTER 4 : MARKET STRATEGY 43
SECTION 1 : PRODUCT 43
SECTION 2 : PRICE 45
SECTION 3 : PLACE 57
SECTION 4 : PROMOTION 64
CHAPTER 5 : QUANTIFIED BUDGET 70
SECTION 1 : FORECASTED INCOME 70
CHAPTER 6 : CONCLUSION AND RECOMMENDATION 73
SECTION 1 : CONCLUSION 73
SECTION 2 : RECOMMENDATION 74
CHAPTER 7 REFERENCES 76
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Chapter 1: Company and Product
Background
Section 1: About the Company
“Twin Lotus, the purity from the nature, the product known
by word of mouth”.
History
Twin Lotus Co., Ltd. was established in 1977 in the
form of a small herbal drug store where the drugs
made from herbs were manufactured and sold. And
then the President of the Twin Lotus Co., Ltd., Dr.
Boonkij Silertphant wanted to see the Company’s
products to be more widely known, not only by the
small group of people who had chances to try the
good things offered by him, but he also wished all the
consumers around the world to get to know these good things as well. With his
farsighted vision, he who has been experienced not only as the Country’s number
one herbal export, but he had made the analysis on the market conditions within the
country at the time and the marketing opportunity had been closely observed.
At that time the herbal toothpaste had been produced by no one in Thailand,
only the toothpastes imported from the foreign countries were available in the market
but they were not made from the pure herbs and also the prices were very
expensive. With the marketing opportunity this has become the point of the beginning
for the Twin Lotus Co., Ltd. to commence its research and investigation of this new
product with the purpose for the creation of the toothpaste made from the Thai
natural herbs. Actually they have many failures at the trial steps but finally the
toothpaste with more than ten valuable Thai herbs had been originated for the first
time under the name of Twin Lotus Herbal Toothpaste.
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Marketing Channels
After the successful invention of the product and to distribute those products
around the country, Twin Lotus was looking for the reasonable marketing channels.
They hay many stage as following:
In the first stage the group of small truck units had been scattered into many
prime locations using the direct hand to hand selling system together with the sell
with right of redemption system strategy. After the products had been inclusively
marketed almost around the country, the radio advertisement began to be used as
the media for the second stage. Before long the sales had been continuously and
surprisingly increased. Upon the beyond expectation of success with the radio
advertisement the Company turned to the television for its commercials and the
products began to be widely known by the consumers who responded well to the
products and enabled the sales to be established around the country with the
substantial revenues. It has quickly become the country’s number one leader on the
herbal products manufacturer.
Distribution Channels
Nowadays the company has been provided with many channels for the
distribution of products to the hands of consumers. There are three main channels as
following:
1. Modern Trade Unit consists of the discount stores, superstores,
supermarkets and the convenient marts (7-Eleven, Family Mart). This unit is under
the supervision and service of more than 30 team staffs.
2. Whole Sale Unit takes care of the wholesale stores (middlemen) under
the supervision and service of more than 20 team staffs. Over 50 trucks are available
for quick delivery and transportation of the products.
3. Traditional Trade Unit protrudes the service to customers and the retail
stores around the country using the 6-wheel trucks with 2 employees available for
each truck ready for the delivery of the products to the customers’ sites under the
supervision of 20 employees for this unit.
In part of the foreign market, the local market has been extended to cover
those in the Asian countries such as China, Vietnam, Cambodia, Lao and the
countries in the Middle East where the Company’s products have been awarded with
the Halal sign by Sheikhul Islam, according to the Islamic Principle, resulted in the
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popularity of the Company’s products among the group of countries in the Middle
East. Furthermore, the company is now going to have the market extended to the
European countries such as Italy, Germany, England and many others.
Corporate Information
Today 350 employees are employed by the Twin Lotus Co., Ltd. with the
advanced Laboratory, operated by the most advanced machinery from Germany,
controlled by the digital computer system to deal with the current expanded market
and the export.
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Corporate Profile
Company Established: 7 August 1989

Registered Capital: 100 Million Baht
Business Type: Production And Distributor Herbal Product
Company Name: Twin Lotus Co., Ltd
Head office: Twin Lotus Co., Ltd
Location:
• Head office: 12/5 Soi Pattanavet, Sukhumvit Rd., Prakhanongnua,
Wattana, Bangkok 10260, Thailand
• Twin Lotus Branch: 37/235 Moo 6 Nongbon Pravet Bangkok 10250,
Thailand
• Twin Lotus Factory: 999 Moo 7 Soi Poolcharoen Bangna – Trad Rd.,
Bangchalong, Samutprakan 10540, Thailand
Product Category: Oral Care Product, Skin Care Product, Hair Care Product
Award And Certification: GMP, TISs , HALAL , Thailand's Brand
Total Employees: 350
Markets Channel: Modern Trade, Credit, Cash Van
Other Business: Hotel, Resort, Twinlising
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Executive Team
Dr.Boonkit Leelertphan: President of Twin Lotus Group
Ms.Sunantha Leelertphan: Vice President of Twin Lotus Group
Ms. Chitlada Leelertphan : Managing Director of Finance
Mr. Jakkapat Leelerdphan : Managing Director of Hotel and Resort
Mr. Piti Leelerdphun : Managing Director of Marketing
Mr.Bundid Leelerdphun : Managing Director of Production
Mr. Kamthon Leelerdphan : Managing Director of Beijing RO
Mr. Prasopsak Angsuthornchai : Human Resource Manager
Ms. Kobkamol Leelerdphan: Assistant Managing Director of Hotel &

Resort
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Section 2: Product Background
There are 3 category products as below
1) Oral Care
Toothpaste: Twin Lotus Herbal Toothpaste -Original formula, Twin Lotus Herbal
Fresh And Cool Toothpaste
Mouthwash: Herbal Mouthwash
Lozenge: Icicle Lozenge
2) Skin Care
Soap: Twin Lotus Herbal Soap

Bathing Cream: Twin Lotus Bathing Cream ….. Blending herbal value.
3) Hair Care
Shampoo: Twin Lotus Herbal Shampoo Extra for Dropping Problem, Twin Lotus
Herbal Serum Shampoo Conditioner: Twin Lotus Herbal Serum Conditioner
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Toothpaste
Twin Lotus Herbal Toothpaste, Original formula

It comes in the new form of advanced
appearance, they have maintaining with the
same quality of more than 10 valuable natural
herbs for healthy and strong gums and teeth
protection. It can help relieving sensitive teeth
and reducing cigarette, tea and coffee stains,
eliminating bad breath and keeping breath fresh
and clean.
“The color of the Twin Lotus Herbal Toothpaste is dark because it is made of
pure herbal ingredients.”
Twin Lotus Herbal Fresh and Cool Toothpaste

The complete fresh and cool formula can help to
protect various problems in the mouth cavity.
With whiter toothpaste texture and specific
cooling herb formula, it helps to increase the
cooling effectiveness in the form of Thai herbs
for fresher and cooler than the original one. It is
mixed with natural herbs with the healthy and
strong gum and teeth protection properly, and helps reducing the symptom of
sensitive teeth and bleeding along the gumlines. It also useful for oral healthy by
helps to reduce the cigarette, tartar, coffee and tea stains, eliminates bad breath and
keeps breath fresh and clean all day long.
Prices:
160 g. 35 Bath
100 g. 25 Bath
40 g. 10 Bath
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Mouthwash
Herbal Mouthwash
It is the mouthwash with antiseptic for
fresh breath made of pure natural herb extracted
from aloe Vera and honeysuckle. It helps to
relieve the bacteria and the inflamination in the
mouth cavity, reduce the accumulation of bacteria
which is the cause of bad breath. With the taste of the Twin Lotus’s Thai herbal
formula, it helps to increase the confidence.
Lozenge
Icicle Lozenge
Manufactured in France, this product consist of the
mixture of cooling substance, using sorbetal and
sucrose as sweetener instead of sugar, to make the
breath smell sweet and fresh, add to your confidence
every day.
With the changing age, new generation of customers come to replace the old
ones. Twin Lotus Company considers that there must be the adaptation of form and
characteristics of the product to suit the new group of customers in order to expand
the customer base of Twin Lotus Icicle Lozenge, through product development for
higher quality above that of the competitors. At the same time, the Twin Lotus logo is
imprinted on the product packages because the research showed that when the
customers think of the Twin Lotus, they think of herbal at the same time.
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Soap
Twin Lotus Herbal Soap

The sanitary soap for nourishing and
maintaining the complexion with the pure natural
herb ingredients. It will take good care of dry
and tough skin to become soft, fresh and
touchable, yet able to clean all filths and
bacteria which are the cause of body odor. In addition, it keeps to protect and treat
the infected skin if used it continuously. It also can take care of the cracked heel and
Hong Kong foot effectively without using together with other kinds of drugs.
“Twin Lotus Herbal Soap can respond to all skin conditions.”
Bathing Cream
Twin Lotus Bathing Cream

Extracting from nature to blend the value of Witch
Hazel Extract, Olive Oil Derivatives, Saffron and
special herbal formula of Twin Lotus, leading to
deeply clean bathing for the alleviation and
maintenance of the skin; at the same time, adding
freshness and revealing the smooth fair skin, with
freshness and tenderness, attractive to touch;
preventing wrinkles, uniting the skin as well as reducing rashes and itchy spots.
Shampoo
Twin Lotus Herbal Shampoo Extra for Dropping Problem

Extra Twin Lotus Shampoo concentrated herbal
formula is special shampoo with ingredients of natural
genuine herbs which are directly beneficial to hair and
scalp. It contains lemongrass oil and Clitoria Tematea
extracted from real plant. Every time your apply Extra
Twin Lotus Shampoo special concentrated formula,
your hair and scalp hygiene are naturally well treated.
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Twin Lotus Herbal Shampoo F1 for Dropping Problem
F1 Twin Lotus Shampoo with its transparent pure
solution ingredients extracted from genuine natural
herbs which have properties that reinforce hair and
strengthen hair-roof cells is especially suitable for those
who confront itch, dandruff or hair-dropping problems
Twin Lotus Herbal Serum Shampoo

The shampoo that is extracted from natural herbal
concentrated formular that emphasizes special hair
nourishment, with the main mixture of herbal from
Germany, together with the special Thai herbal
formular of Twin Lotus. The Juniper Leaf that helps
protect the hair from damaging by the environment.
The Stinging Nettle Leaf that helps adjust the
balance of the head skin. The special formular Thai herbal of Twin Lotus strengthens
the hair from roots to tips, enables the hair to be weighty, smooth and easy to set. It
is suitable for damaged hair or colored hair.
Conditioner
Twin Lotus Herbal Serum Conditioner

The hair conditioner that is extracted from natural
herbal concentrated formula in abundance of various
nutritious substances for the hair that nourishes and
permeate deeply through to the internal core. It consists of
the main herbal mixture from Germany, together with the
special Thai herbal formula of Twin Lotus. Juniper helps
protect the hair from damaging by the environment. Stinging Nettle helps adjust the
balance of the head skin. The special formula Thai herbal of Twin Lotus strengthens
the hair from roots to tips, enables the hair to become weight, smooth and easy to
set. It is suitable for damaged hair or colored hair.
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Chapter 2: Market Analysis
Section 1: Country Background
China is one of the four oldest civilizations in the world, now they are the symbol of
the rich culture of the Chinese nation. China has gone over a long history of primitive
society, slavery society, feudal society and semi-feudal semi-colonial society and the
present socialist society
GEOGRAPHY
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The greater part of the country is mountainous. Its principal ranges are the
Tien Shan, the Kunlun chain, and the Trans-Himalaya. In the southwest is Tibet,
which China annexed in 1950. The Gobi Desert lies to the north. China proper
consists of three great river systems: the Yellow River (Huang He), 2,109 mi (5,464
km) long; the Yangtze River (Chang Jiang), the third-longest river in the world at
2,432 mi (6,300 km); and the Pearl River (Zhu Jiang), 848 mi (2,197 km) long.
POPULATION
There is about 22 percent of total population in the world. China population is

distributed unevenly with more in the east (more than 300 persons per square
kilometer) and fewer in the west (about 40 persons per square
kilometer. The national average density of population is 119 per
square kilometer (1990 census). For basic urban population data,
The average size of household was 3.7 persons. The proportion of
population aged at 0-14 was 26.4 percent, those aged 15-64 was 67.2 percent, and
that of the people aged 65 and over was 6.4 percent. The Average Chinese Life-
Span of the population was 70.8 years, that for male was 68.71, and female, 73.04.
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Table below show Total population since 1949 to 2006
Year Total Population Urban Population Rural Population
1949 542 million NA NA
1985 1.058 billion NA NA
1996 1.224 billion 359.5 million (29.4%) 864.39 million (70.6%)
2000 1.2953 billion 36% 64%
2006 1.31397 billion FYA FYA
Table below show Birth rate, Death rate, Natural growth rate since 1970 to
2006
Birth Rate Death Rate Natural Growth Rate
Year
(Per Thousand) (Per Thousand) (Per Thousand)
1970 33.43 NA 25.83
1995 17.12 6.57 NA
1996 16.98 6.56 10.42
1997 16.57 6.51 10.06
1998 16.30 6.50 9.53
1999 15.23 5.97 8.77
2006 13.2 NA NA
NATIONALITIES
The People's Republic of China is a unified, multi-national country,

comprising 56 nationalities. The Han people make up 91.02 percent of the total
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population, leaving 8.98 percent for the other 55 ethnic minorities. They are
Mongolian, Hui, Tibetan, Uygur, Miao, Yi, Zhuang, Bouyei, Korean, Manchu, Dong,
Yao, Bai, Tujia, Hani, Kazak, Dai, Li, Lisu, Va, She, Gaoshan, Lahu, Shui,
Dongxiang, Naxi, Jingpo, Kirgiz, Tu, Daur, Mulam, Qiang, Blang, Salar, Maonan,
Gelo, Xibe, Achang, Pumi, Tajik, Nu, Ozbek, Russian, Ewenki, Benglong, Bonan,
Yugur, Jing, Tatar, Drung, Oroqen, Hezhen, Moinba, Lhoba and Gelo. All
nationalities in China are equal according to the law. The State protects their lawful
rights and interests and promotes equality, unity and mutual help among them.
FAMILY NAMES
Chinese family names came into being some 5,000

years ago. There are more than 5,000 family names, of
which 200 to 300 are polular. The order of Chinese names
is family name goes first, following by given name. For
instance, the family name of a person is Wang, given name
is Dong, his/her full name would be Wang Dong . The most
popular Chinese family names are LI, ZHANG, WANG, LI,
ZHAO, LIU, CHEN. According to the most recent official
statistics, the three most popular family names are: LI,
WANG and ZHANG, occupied 7.9% (97million), 7.4 and
7.1 of total population in China respectively.
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RELIGIONS
China is a multi-religious country. Buddhism, Taoism, Islam, Catholicism and

Protestantism, with the first three being more wide spread.Various religions exert
different influence on different ethnic groups. Islam is followed by the Hui, Uygur,
Kazak, Kirgiz, Tatar, Dongxiang, Salar and Bonan nationalities; Buddhism and
Lamaism are followed by the Tibetan, Mongolian, Dai and Yugur nationalities;
Christianity is followed by the Miao, Yao and Yi nationalities; Shamanism is followed
by the Oroqen, Ewenki and Daur nationalities; the majority Han nationality believes in
Buddhism, Christianity and Taoism.
ECONOMIC GROWTH (1995-2005)
Year Economic Growth Rate

1995 10.2%
1996 9.8%
1997 8.6%
1998 7.8%
1999 7.2%
2000 8.4%
2001 7.2%
2002 8.9%
2003 10.0%
2004 9.5%
2005 9.3%
Source : http://www.princeton.edu/~gchow/Are%20Chinese%20Official.doc (Accessed on 10
Jul 2006)
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Economic Growth Rate
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MONEY
Chinese Money is called Renminbi (RMB) (means "People's Currency"). The

popular unit of RMB is Yuan. The official exchange rate between U.S. Dollar and
Renminbi Yuan currently is about 1 : 8.3 (1.00 Dollar = 8.30 Yuan). 1 Yuan to 10
Jiao, 1 Jiao to 10 Fen (There are parts of China the Yuan is also known as Kuai and
Jiao is known as Mao. Chinese currency is issued in the following denominations:
one, two, five, ten, fifty and a hundred Yuan; one, two and five Jiao; and one, two
and five Fen.
Thai Baht/Yuan = 4.7443 (Updated on August 11, 2006)
CHINESE CITIES AND PROVINCE
The total number of Chinese cities is 666.

11 cities with population over 2 million;
23 cities with population between 1 millions and 2 million;
44 cities with population between 500,000 and 1 million;
159 cities with population between 200,000 and 500,000;
393 cities with population less than 200,000.
The number of Mayoress in China is 375;

The total urban population in China is 515.11 million.
(The data are based on the statement issued by the Second Session of Chinese
Mayor's Association in May 22, 1996 and the Report of China National Statistic
Bureau in 1997. Some data were updated on October 17, 1997)
There are 5 provinces with population over 50 million (2001)

All of China's 4 municipalities with population over 10 million (2001)
The most populated administration division: Henan Province with population 92.56
million (2001)
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The least populated administration division: Tibet (Xizang) Autonomous Region with
population 2.62 million (2001)
Largest cities:
Shanghai, 12,665,000 (metro. area), 10,996,500 (city proper);

Tianjin (Tientsin), 9,346,000 (metro area), 4,333,900 (city proper);
Wuhan, 3,959,700;
Shenyang (Mukden), 3,574,100;
Guangzhou, 3,473,800;
Haerbin, 2,904,900; Xian, 2,642,100;
Chungking (Chongquing) 2,370,100;
Chengdu, 2,011,000;
Hong Kong (Xianggang), 1,361,200
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MAIN PORTS OF ENTRY
There are 3 ways to entry China as below:
Air: Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Harbin, Hohhot, Hong

Kong, Kunming, Qingdao, Shanghai, Shenyang, Tianjin, Urumqi, Xiamen and Xi'an.
Land: Alataw, Baketu, Erenhot, Friendship Pass, Hunchun, Ji'an, Kunjirap,

Manzhouli, Mohe, Nyalam (Zhangmu), Pingxiang, Ruili, Suifenhe, Tumen, Wanding,
Xunke and Yadong.
Water Beihai, Dalian, Dangdong, Guangzhou, Haikou, Hankou, Huangpu,

Jiujiang, Lianyungang, Nanjing, Ningbo, Qingdao, Qinhuangdao, Sanya, Shanghai,
Shantou, Shenzhen, Tianjin, Weihai, Yangzhou, Yantai, Zhangjiang and Zhenjiang.
TRANSPORTATION
Railways: total: 71,898 (2002).

Highways: total: 1,765,222 million km;
paved: 395,410 km (with at least 25,130 km of expressways);
unpaved: 1,369,812 km (2002 est.).
Waterways: 121,557 km (2002).
Ports and harbors: Dalian, Guangzhou, Nanjing, Ningbo, Qingdao,
Qinhuangdao, Shanghai.
Airports: 472 (2004 est.).
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GROWTH OF CHINA’S FOREIGN TRADE (1995-2000)
(Unit USD$ 1 billion)

Year Imports Exports
1995 132.1 148.8
1996 138.8 151.1
1997 142.4 182.7
1998 140.2 183.8
1999 165.8 194.9
2000 225.1 249.2
Source: Government Publication and official news release.
CHINA’S TOP 10 TRADING PARTENER IN 2000*
(Unit US$ 1 billion)
Country & Country &

Rank Rank Import & Export Export Import
Region(2000) Region (1999)
1 Japan 1 Japan 66.2 32.4 33.8
2 USA 2 USA 61.5 42.0 19.5
3 EU 3 EU 55.7 30.2 25.5
4 Hong Kong 4 Hong Kong 43.8 36.9 6.9
5 ASEAN 5 ASEAN 27.1 12.2 14.9
6 ROK 6 ROK 25.0 7.8 17.2
7 Taiwan 7 Taiwan 23.5 4.0 19.5
8 Australia 8 Australia 6.3 2.7 3.6
9 Russia 9 Russia 5.7 1.5 4.2
10 Canada 10 Canada 4.7 2.4 2.3
Source: Government Publication Beijing Review Vol. 43 No. 14
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CHINA’S TOP 20 IN IMPORT & EXPORT VOLUME IN 1999
(Unit US$ 1 million)

Rank Company Volume
1 China National Petrochemical International Corporation 4,933.83
2 China National Chemicals Import & Export Corporation 4,765.96
3 China General Technology (Group) Holding Ltd. 2,873.68
4 Motorola (China) Electronics, Ltd. 2,664.75
5 Orient International (Holding) Co. Ltd. 2,610.30
China National Cereals, Oils and Foodstuffs Import & Export
6 2,551.08
Corporation
7 China National Electronics Import & Export Corporation 1,759.79
8 China Aviation Supplies Import & Export Corporation 1,642.70
9 China National Petroleum Corporation 1,584.06
10 China National Air Technology Import & Export Corp. 1,528.48
11 China National Metals & Minerals Import & Export Corporation 1,478.22
12 Baosteel Group International Trade Corporation 1,218.01
13 China National Arts and Crafts Import & Export Corporation 1,232.01
14 China Shipbuilding Trading Co. Ltd. 1,215.83
15 Seagate International Technology (Wuxi) Co. Ltd. 1,163.11
16 China National Machinery & Equipment (Group) Corporation 1,160.02
17 China National Coal Industry Import & Export (Group) Corporation 1,104.39
18 Shenzhen Seagate Technology Co. Ltd. 1,088.35
19 Intel International (China) Ltd. 1,080.05
China National Native Produce and Animal By-Product Imp & Exp.
20 1,054.82
Corp.
Source: Government Publication Beijing Review No. 33, 2000
Source: http://elsa.berkeley.edu/~yqian/econ162/econ162%20topic10s.pdf (Accessed on 10

Jul 2006)
ECONOMIC SUMMARY
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GDP/PPP (2005 est.): $8.182 trillion; per capita $6,300.
Real growth rate: 9.3% (official data).
Inflation: 1.9%.
Unemployment: 4.2% official registered unemployment in urban areas in
2004; substantial unemployment and underemployment in rural areas; an official
Chinese journal estimated overall unemployment (including rural areas) for 2003 at
20% (2004).
Arable land: 15%.
Agriculture: rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples,
cotton, oilseed; pork; fish.
Labor force: 791.4 million (2003); agriculture 49%, industry 22%, services
29% (2003 est.).
Industries: mining and ore processing, iron, steel, aluminum, and other
metals, coal; machine building; armaments; textiles and apparel; petroleum; cement;
chemicals; fertilizers; consumer products, including footwear, toys, and electronics;
food processing; transportation equipment, including automobiles, rail cars and
locomotives, ships, and aircraft; telecommunications equipment, commercial space
launch vehicles, satellites. Natural resources: coal, iron ore, petroleum, natural gas,
mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite,
aluminum, lead, zinc, uranium, hydropower potential (world's largest).
Exports: $752.2 billion f.o.b. (2005 est.): machinery and equipment, plastics,
optical and medical equipment, iron and steel.
Imports: $631.8 billion f.o.b. (2005 est.): machinery and equipment, oil and mineral
fuels, plastics, optical and medical equipment, organic chemicals, iron and steel.
Major trading partners: U.S., Hong Kong, Japan, South Korea, Germany,
Taiwan (2004).
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Section 2: Competitor analysis
According to the Chinese toothpaste association, China is the world’s largest

producer of toothpaste turning out 5.2 billion tubes and earned a net profit of more
than US$70 million in 2005. Some of the products are promoted for teeth
desensitization, whitening and other hygienical purposes. The market share of
foreign toothpaste brands like Colgate and Signal (Unilever) in the three major
Chinese cities of Beijing Shanghai and Guangzhou is 55%.There are many brands of
toothpaste in the Chinese market. Among them some of the biggest players are
Unilever China, P&G China, Unilever Shanghai Toothpaste Company, Ghonzhau
Colgate, Liuzhou L.M.Z.Co., LTD, Shanghai Toothpaste Factory., LTD, Guangzhou
Masson Group Corporation, etc.
Some more numbers: Over the same period, the number of toothpaste brands
rose from 100 to almost 800
Unilever China
Unilever (China) Ltd., a holding company, was established in 1996. One of the
first ventures was with a well-known local brand, Maxam toothpaste in order to
improve its marketing and distribution system in the Chinese market. Before 80
years, Lever brothers established its first operation in Shanghai in 1923 which
became the largest soap maker in the Far East.Unilever reestablished itself in
Shanghai as a multi-local multinational in China. Unilever reestablished itself in China
in 1986 through strategic tie-ups with local companies. However, the joint venture
route that the company adopted backfired, and Unilever found itself losing out to its
American counterpart, Procter and Gamble. In late 1990s and early 2000s, the
company entered into a restructuring and consolidation mode to reorganize and
strengthen its position in China. The company management recognized the vast
opportunities that the Chinese market offered, and adopted well-planned strategic
means to exploit these to their fullest. Among the steps the company took during its
restructuring efforts were plans to get listed on the Chinese stock market,
consolidation of its various units into one holding company, replacement of
expatriates with local employees and localization of a number of products. Unilever
has introduced over 20 brands to Chinese consumers which consist of home and
personal care. F&B and ice-cream.From1986 to 2001, Unilever China adds up to
about $1 billion in investment, introduced more than 100 types of advanced
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technologies, creation of 14,000 job opportunities and more than 4000 local
employees. The company toothpaste brands for consist of: Zhonghua, Signal,
Pepsodent. The annual tax amount has reached RMB600 million.
Unilever invested RMB166 million to set up Unilever Research China, the 6th
global research center of Unilever. This center has access to the scientific knowledge
developed globally by Unilever and acts as a bridge to Chinese academia by
introducing more traditional natural ingredients into our products. In 2002, following
China's accession to WTO, Unilever established a global supply management office
in Shanghai. This office will provide more opportunities for Chinese suppliers for raw
materials to export to Unilever companies overseas.
In 2003, Unilever's manufacturing base for home and personal care products is
set up in Hefei, making it one of the biggest manufacture sites for Unilever global.
This site not only provides high quality products for Chinese consumers, but also has
the great potential to serve as the manufacturing center for Unilever global business.
In 2004, Unilever made the decision to build its own office building in Shanghai as
regional headquarter.
Unilever believes that successful localization starts with the localization of

employees. An outstanding local team can better understand and meet the needs of
Chinese consumers. In Unilever, 90% managers are recruited and trained
locally.Unilever seeks to be a responsible employer, business partner and good
corporate citizen, earning respect for our values wherever we operate.
Since 1996, the companies launched “Zhonghua” teeth protection campaign

across the whole country to established Unilever’s image as a responsible social
citizen in China and win the acknowledgement of the local society.
Strategies of unilever
In spite of major difficulties, Unilever was committed to building and sustaining

a successful business in China. The company therefore adopted several measures
like enhanced research and development, modern management systems and large
scale organizational restructuring to anticipate and integrate the needs and
aspirations of the Chinese customers into its growth plan. In the mid 1980s and
1990s, the large number of joint ventures entered by the company failed to earn
profits for the multinational and also proved unsuccessful in integrating Unilever to
27
mainstream Chinese economy. Therefore, in 1999, the company entered into large
scale consolidation and integrated its various units under one holding company.
Special localized strategies like hiring of local employees, setting up an R&D unit,
and planning for stock market listing were initiated to strengthen the company’s
position in China. Unilever China responded to the complex needs of the country’s
consumers by developing a portfolio of brands-both local and global, and
incorporated traditional Chinese sciences with technological enhancements. The
company aimed to identify itself as the brand that was quality conscious and
consistently endeavored to meet local needs and tastes. Global brands-Dove, Lux,
Ponds, Lipton-promised international expertise in their formulation and development
but had local professionals to manage them to ease communication between the
company and its customers.
P&G China
In 2005, P&G China became the first company for prime time advertising slots
on the China Central Television (CCTV) investing 394 million yuan for 2006
advertising space.P&G had been the biggest bidder for advertisement space for 2005
as well, spending about 385 million yuan. Earlier, in 2004, P&G had invested just 180
million Yuan. This sharp increase in advertising expenses reflected the increased
importance P&G attached to advertising its products in the fast growing Chinese
economy. Demand for items such as Crest toothpaste was rising faster in developing
countries than in developed countries. As of May 2005, sales of P&G in mainland
China, Hong Kong and Taiwan totaled US$ 2 billion, with a cumulative average
annual growth rate of 25 percent between 2002 and 2005. P&G's success in China is
due to its coverage of 400-plus cities. This means penetrating well beyond the
coastal region. It also means working with distributors, teaching them, strengthening
them, creating win-win partnerships that take time, are painful, but yield great
proprietary benefits.
LIUZHOU L.M.Z.CO., LTD.
Liuzhou LMZ was set up in 1980 and is able to maintain its position to a
National Grade 1 large enterprise. It has fixed asset worth 350 million RMB, self fund
300 million RMB and annual gross value of industrial output 600 million RMB from
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previous fixed asset 0.6 million RMB and annual gross value of industrial output 4.5
million RMB within 20 years. Liangmianzhen (LMZ) has become one of the most
famous China’s national trade marks. Insisting on reforming and opening up,
economic construction as the centre, marketing demand as guidance, and sales of
products as leader, technology and management as power is the reason of the
company’s high-speed development. Company’s economic indexes have increased
for 32.96%, 34.87% and 28.3% average annually in turnover of sales, tax & profit and
net profit since 1990.
LMZ toothpaste contains a Chinese herb Liangmianzhen which is grown in

Guangxi especially. It is useful in eliminating periodontis, dental calculus, gum
bleeding, sensitivity and toothache. Its high quality has won a good reputation both in
China and abroad including title of Excellent Product issued by National Light
Industry Ministry and other 100 awards.
LMZ product information

LMZ Children Toothpaste　 The product contains fluoride between 400-
500 PPM, just one-third of the adult’s toothpaste.
It helps prevent dental caries and avoid side
effect.
The power of the grind material is only half
of adult’s toothpaste, specially fit for children’s
non-grow-up teeth (younger than 18 years). The
natural fresh colored transparent paste gives
children more attraction.
LMZ Chinese Traditional It is made of the extract of shiny lead prickly
Medicine Toothpaste　 ash root, chlorophyll and excellent abrasive. It
helps prevent oral diseases, toothache and
halitosis. It is an ideal product for oral care and
tooth clean.
LMZ COLORED STRIP The two-colored paste of LMZ colored strip
TOOTHPASTE　 toothpaste contains natural essence plant and
fluoride, which has an efficacy in anti-
inflammation and pain easing, preventing dental
caries and strengthening gums, etc. Prolonged
use will protect your teeth in an all-round way,
and bring about your oral health.
29
LMZ F & F Toothpaste　 Made by natural plant essence and fluoride,
It offers and unique effect on inflammation,
prevent sensitively and provides anti-cavity
fluoride protection
LMZ Plant Essence With added Chinese herbal medicine, this
Toothpaste　 product can fight dental caries, strengthen gums,
prevent sensitivity and stop bleeding. It has
obvious effect on diminishing periodonititis, tartar,
toothache and halitosis. No side effect. Smooth
compound abrasive and great cleaning power,.
Natural peppermint and spearmint flavor
refreshes your breath
LMZ Pure-white Toothpaste　 It has a natural formulation. It can whiten
and beautify your teeth. Using with LMZ Chinese
Traditional Medicine Toothpaste in turn can
protect your teeth and promote good oral health.
LMZ Sodium Fluoride With significant whitening effect for complex
Toothpaste　 tooth protection, its special composition actively
helps to remove problems like yellow teeth,
creation of spots and carries. The special fine-
grained powder has whitening effects, removes
plaque and spots and it also helps to reduce
tartar creation when used regularly. Highly
effective combination of ingredients and cooling
taste of mint for healthy teeth and long-lasting
fresh breath.
LMZ Whitening Tooth Paste　 With whitening ingredient, this product is
able to clean up stained pellicle efficiently which
is caused by the long-term sedimentation of
residual food on dental surface. And enjoying its
as a regular toothpaste for daily use, you can
posses yourself of shinning white teeth again.
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Shanghai Toothpaste Factory Co., Ltd.
Shanghai Toothpaste Factory has the history of more than eighty years and
takes the leader position in China toothpaste industry for its average output, industry
output value, sale income, tax and profit produced by one man. With advanced
technical process, stability of production quality, its output for export is 30% of total.
Among the main brands of toothpaste manufactured by the company are

Spearmint, Shanghai, Jade, etc. The Spearmint brand toothpaste offers fine paste,
rich foam, high abrasion and good testing; it also has the function of preventing tooth
from decay containing fluoride. Filled in high quality aluminum and laminate tube, the
production is exported to more than10 countries and regions, the company
manufactories the toothpaste asked by customer using their brand. The factory
manufactories and runs business with chemical raw material concerning with
toothpaste, cosmetic, detergent, such as: sodium lauryl sulfate, sobital, lauryl alcohol
sulfate ethanolamine, ammonium lauryl sulfate, potassium lauryl phosphate,
hydrated silica’s, coating, paint and also manufactories the equipments using in
toothpaste, cosmetic and detergent industry. All its products have obtained ISO9002
certification Standards & approvals ISO9002, other standards & approvals GB8372-
1995
C & T market
Foreign companies have successfully entered the C & T market, backed with
massive advertisement investment, and are primarily targeting young, urban parents
with a relatively high disposable income. They dominate China's C&T market,
"having been quick to enter, investing heavily in introducing brands that have been
mostly superior in quality to what was produced locally," says Access Asia. Procter &
Gamble heads the list with a 17% market share, followed by Unilever Shanghai
Toothpaste Company (9.5%), Unilever China (6.3%) and Guangzhou Colgate (5.4%).
In the face of the multinational onslaught, many Chinese consumers remain fiercely
loyal to local C&T, considering foreign brands overpriced and more likely to be fakes.
And today, there are many reasons to buy Chinese.
The presence of multinationals has forced domestic players from the outset to
formulate strategies in response to the foreign challenge. The leading local
companies took a proactive approach by entering joint ventures with the
31
multinationals, which had benefits for both partners. The foreign companies profited
from their partners' local knowledge and distribution network, while domestic
companies gained the expertise they had previously lacked, particularly
inmanagement and marketing.
Foreign brands dominate the cosmetics market in china. China's cosmetics

market has reached maturity, with more than 3,000 brands of cosmetics on offer
nationwide.
About 20 brands dominate the market. In fact, foreign and joint-venture

cosmetics enterprises are carving out the lion's share (80%) of the market, while
small- and medium-sized enterprises investing up to Rmb50 million (HK$47 million) –
and representing 90% of the players - take just 20%
32
Section 3: SWOT analysis
Company Analysis
Strengths
• Modern laboratory under GMP standard.

• The most advanced technological machine from Germany.
• The qualified waste water treatment system.
• Made of pure herbal ingredients.
Weaknesses
• No safety license (Chinese).

• New comer in Chinese toothpaste market.(low experience)
• No relationship with distributors in China (especially in rural market).
Market Analysis
Opportunities
• China’s fast-moving consumer goods (FMCG) sector recorded a 7% increase

in sales value in 2004.
• The toothpaste is frequently purchased consumer products.
• The rapid development of modern retail outlets, 30% increase in modern
outlets.
• The non-food categories (shampoo, skin moisturizer, laundry detergents,
toothpaste and sanitary protection products) are the top five categories with
the largest share of sale value.
• The huge number of consumer population in China is 1,307.4 million in 2005
(about 22% of total population in the world).
33
• Highest average GDP growth (about 9.5%) of the world (2001-2005).
• Toothpaste demand is mainly being driven by the overall market growth of 8-
10%
Threats
• More than 90% of toothpastes sold in China now have one or more additives
purported to promote oral health.
• China is the world’s largest toothpaste producer (5.2 billion tubes)
• Main competitors such as Nestle, Colgate-Palmolive, Unilever, and Procter &
Gamble (Colgate has its market share over 30% in 2002).
• Economic liberalization and sustainable growth alongside enduring political
control.
• The rate of corporate income tax is theoretically 33%.
• In certain professions a lack of skill has led to labors shortages.
• The capital market remains underdeveloped in China.
• The number of toothpaste brands is almost 800 brands.
• The price of advertising spot on television is very high.
• Launching a new brand is expensive.
• Price sensitive in China market (especially in rural area).
• A very different group of consumers in China.
• Local companies enjoy a cost advantage of as much as 30% against their
foreign competitors.
• MNCs (Multinational Corporation) in China usually have higher logistics and
supply chain costs than their Chinese counterparts.
34
Section 4: Target analysis
China is the new booming market since they open the market to the world
and joining the World Trade Organization in 2001. China's fast-moving consumer
goods (FMCG) sector recorded a 7% increase in sales value in 2004.
But not all of China is booming: rural areas have lagged behind. And growth
has not been without hiccups. In certain professions a lack of skills has led to labour
shortages. Pollution is rife, and health care strains rural resources. The banking
industry has been the target of recent reforms, but bad loans are on the rise, while
the capital market remains underdeveloped.
The company should focus on urban market that has high purchasing power
and consumption.
The target groups for Twin lotus toothpaste are;
Herbal-concern Group : Tend to be herbal-concern in China, especially in

urban area, is growing up. Due to increasing of demand in healthy tend, the
toothpaste consumers will not concern only chemical ingredients, 10 natural herbal
from the company are used for toothpaste ingredients to keep gums and teeth
healthy firmly, the herbal formula toothpaste from the company will be served this
target group. This group is willing to pay higher price for higher quality of product.
35
Patient in Hospital and Dental Clinic : The
patients in the hospital or dental clinic are facing teeth
problem. They need some product that can be useful to
their teeth. The selling product in the hospital and clinic
means the good quality product.
Twin Lotus toothpaste will have to obtain a

quality and safety license this year if they want their
products to be sold in the Chinese market, according to
the China Oral Care Products Industry Association,
China's oral care product watchdog.
More than 90% of toothpastes sold in China now have one or more additives
purported to promote oral health, but there are no state standards on the quality and
safety of these products.
The company must have their products pass clinical tests at leading hospitals
and provide authoritative clinical data to support the quality of the products.
36
Chapter 3: ENTRY STRATEGY
Section 1: Entry mode alternatives
1. Wholly Foreign-owned Enterprises
Wholly foreign-owned enterprises, which are totally invested by foreign party

in China by foreign companies, enterprises, other economic organizations and
individuals in accordance with the laws of China. According to the law of wholly
foreign-owned enterprises, the establishment of foreign enterprises should benefit
the development of our national economy and agree with at least one of the following
criteria: the enterprises must adopt international advanced technology and facility; all
or most of the products must be export-oriented. The wholly foreign-owned
enterprises often take the form of limited liability.
Formation procedures
A wholly foreign-owned enterprise is a limited liability company. The law and

regulations prohibit or restrict the establishment of wholly foreign-owned enterprises
in certain industries.
The Ministry of Foreign Trade and Economic Cooperation is responsible for the
examination and approval of wholly foreign-owned enterprises. The local
governments are also authorized to approve these enterprises, provided certain
conditions are met.
Which must include specific information requested under the regulations, to the
relevant government authority investor will receive a written response within 30 days
of submitting the report.
The investor must apply for registration and obtain a business license within 30
days of receiving approval. Tax registration must be performed within 30 days of
establishment.
37
Capital structure
The registered capital cannot be reduced during the term of operation, and
increases or transfers must receive prior approval from the authorities.
Foreign investors may contribute capital in the form of freely convertible foreign
currencies or certified RMB profits form other foreign investment enterprises. Subject
to certain requirements set out in the regulations, may be capitalized according to
their monetary value.
Requirements regarding the timetable for such contributions are published in a

schedule. The first installment must be made within 90 days and the last within three
years of the issuance of the business license.
After all the capital contributions have been made, a Chinese registered
accountant must be engaged to verify the contributions and issue an investment
verification report.
Liquidation, receivership
An enterprise engaging in a high-technology industry will have a life of around
20 years, although it may be extended to 50 years of longer if it has the special
approval of the Chinese government.
Any remaining assets of the enterprise that exceed the registered capital are
subject to income tax.
Wholly foreign-owned enterprises are required to make allocations to a reserve

fund and a bonus and welfare fund for its employees from its after-tax profits. The
reserve fund allocations must be not less than 10 percent of the after-tax profits.
Profits may not be distributed until the prior years losses have been cleared.
2. Equity joint ventures
An equity joint venture is a separate legal entity and takes the form of a
limited liability company registered in China. The partners have joint management of
38
the company, and the profits and losses are distributed according to the ratio of each
partner’s capital contribution.
Formation procedures
Equity joint ventures are governed by Law of the People’s Republic of China
on Joint Ventures Using Chinese and Foreign Investment, promulgated in 1979, and
the Implementing Regulations.
The Ministry of Foreign Trade and Economic Cooperation (MOFTEC) has

overall responsibility for approving joint ventures and for issuing the approval
certificates. The venture has one month in which to register with the State
Administration of Industry and Commerce in the relevant locality to obtain a business
license.
Capital Structure
Law requires the foreign partner to the venture contribute at least 25 percent
of the registered capital. Capital contributions can take the form of cash, capital
goods, industrial property rights, and other assets. All of them must be certified in a
report from a Chinese-registered CPA firm.
Liquidation
Equity joint ventures were originally allowed to operate for a maximum of 30
years. The joint venture must settle all its debts, including the cost of liquidation,
before the remaining assets can be distributed among the joint venture partners.
3. Representatives offices
Foreign enterprises are permitted to open representative offices in China.

Legally, these are to be established purely for liaison purposes, and their activities
are limited to the provision of services that do not give rise to any earnings. The
permissible activities of representative offices include the following
• Researching and collecting market information.
• Providing introductory services to potential buyers and sellers, such as setting
up meetings and passing on price and technical information to Chinese
customers.
• Assisting in making arrangements for trade visits to China.
39
• Coordinating with the parent company and other associated companies or
affiliates.
• The company is required to register with the local tax authorities within 30
days of receiving the business registration certificate.
Limited liability Company

• Shareholders – At least two but no more than 50.
• Minimum registered capital – required minimum capital contribution, which
ranges from RMB 100,000 to RMB 500,000 depending on the industry,
• Capital contributions – In the form of cash, tangible assets, industrial properly,
no patented technology or land-use rights. Industrial properly and no patented
technology may not exceed 20 percent of the registered capital.
• Share transfers – Requires consent of a majority of the shareholders for
transfers to no shareholders.
• Board of directors – Three to 13 directors, in a small company the executive
director may serve in place of a board of directors.
• Supervisory committee – Reviews the financial affairs of the company and
actions taken or directed by the directors.
4. Processing and assembling trade
The processing and assembling trade constitutes a form of cooperation in

which foreign firms place orders with Chinese factories to carry out certain
manufacturing activities for export. These activities generally consist of processing or
assembling commodities according to the foreign firm’s specifications, with the parts
or semi processed items supplied by the foreign firm.
The advantages of foreign processing and assembling businesses are that they
do not require Chinese enterprises to make sizable investments, use scarce foreign
exchange or buy costly equipment. Increased pressure from domestic sales and
exports has created shortages in raw and semi finished materials, components and
spare parts.
40
In order to encourage and facilitate the development of the processing and
assembling trade, materials and components imported for processing and
assembling products for export are exempt from customs duties.
5. Exports
The company can apply export both own representatives and foreign agents.
Only those corporate entities that have registered with SAIC and issued a Corporate
Business License, and have registered with the local inspection and quarantine
authorities and granted an Import and Export Commodity Inspection Agent
Registration Certificate can act as agents for import-export commodity inspection
applications. The inspection and quarantine authorities will not process applications
submitted by unregistered agents.
The agents are responsible for contacting the inspection and quarantine
authorities, arranging the time of inspection, coordinating with the inspection and
quarantine authorities in connection with relevant investigations, and paying fees on
behalf of their clients.
Entry Mode's references

-- Guide to doing Business in China(2004-2005),Page3-1to3-10 and 8-1 to 8-7, HKTDC
Research Department
-- http://en.ec.com.cn/pubnews/2004_02_20/200551/1003710.jsp
-- Economic Analysis Department, Office of international commerce in Shanghai, 2 Feb 2005
and 5 Jan 2006
-- China laws for Investment in China, Page 1-10, Chinalaw2/Viboon1/47(07-04-2003)
Income Tax
Standard Tax = 33%
Special Economic Zone (SEZ)* = 24% (Shanghai & Beijing are included)
(source: Tax Laws System of Republic of China, Vibhoon Tangkittipakorn, Fareast Company
Limited)
41
Section 2: Choosing the Entry Mode
Generally, in selecting the entry mode, there are a number of factors needed
to be considered in China. The importance of each factor varies upon the purpose
and objective of the foreign company that want to enter into a specific market. The
following section will reflect the factors to be considered with the entry mode
available.
1. Formation procedures (include law and tax policy)

2. Capital structure (investment and cost of running the business)
3. Ability to control management
4. Liquidation
5. Effectiveness in reaching the target customer
6. Credibility
7. Risk
We would like to recommend Twin Lotus to enter the Chinese market by

considering with company’s objectives and plan in a particular time and period. As
the main product of Twin Lotus, Thai natural herbs toothpaste under the brand name
of Twin Lotus is first product to enter the market.
Company will implement the entry mode into three periods;

• Preliminary phase is by International Trade Fair to introduce the product and
do market research.
• Short term phase is by Exports.
• Future plan in long term is by Industrial Manufacturing.
After International Trade Fair and launching first promotion, the company has
key entry mode based on the Exportation
Exportation in China is base on Socialism rather than Communism
China government had encouraged economy in China to be the root of world

production and exportation by supporting state enterprises and companies to invest
with International firms.
42
Special Economic Zones (SEZs) have been established in Shenzhen, Zhuhai,
Xiamen, Shantou, and Hainan. The new Pudong area of Shanghi, although not
designated as an SEZ, has SEZ status and is an area in which the Chinese
government hopes to attract extensive foreign investment for development.
China‘s Trade Policy
Exports of manufactured goods are encouraged in order to earn foreign

exchange. Import policy is directed toward acquiring capital goods that embody the
modern technology needed to develop China’s industries. This trade policy is
consistent with company long term plan.
Taxation Policy
China initiated the concept of tax incentive zones and established the Special
Economic Zones. This zone was created primarily to attract foreign investment by
offering investors tax and other incentives. Tax incentives include preferential income
tax rates and tax holidays.
Finance
The projects are generally financed by the foreign investor and by foreign
currency loans form overseas banks. Loans from local banks are available to foreign-
funded ventures in local and foreign currency. However, there are minimum capital
requirements that restrict the extent to which an investment can be financed by
loans.
Labor and Labor costs
A large labor force is available. In the major, more developed, cities

competition for good qualified staff may also be intense and additional incentives
may have to be offered to attract and retain qualified staff.
43
Chapter 4: Market Strategy
Section 1: Product Strategy
The products of Twin Lotus are oral care, hair care and skin care. The
company should target on the strongest product as toothpaste.
Product description
The complete fresh and cool formula can help to protect various problems in
the mouth cavity. With whiter toothpaste texture and specific cooling herb formula, it
helps to increase the cooling effectiveness in the form of Thai herbs for fresher and
cooler than the original one. It is mixed with natural herbs with the healthy and
strong gum and teeth protection properly, and helps reducing the symptom of
sensitive teeth and bleeding along the gumlines. It also helps to reduce the cigarette,
tartar, coffee and tea stains, eliminates bad breath and keep breath fresh and clean
all day long.
Product Position
The company should set the product position as “premium brand” better or
equal to Crest and Colgate. This Twin Lotus brand is a new brand in the China
market we can create product image as high quality product.
Packaging Design
The beginning to entry to China, product design and packaging will not be
changed anything except language. The company needs to translate product
description on the package as Mandarin.
For the next step, the company should try to change their product innovation
and design as customer needs.
Tube Design : Design as lotus flower with green , pump able.
44
45
Section 2: Price Strategy
How we set the selling price
FACTORS INFLUENCING PRICE DETERMINATION
• BASE PRICE or “list price” refers to the price of one unit of the product at its
point of production or resale. This price does not reflect any discount or
freight charges.
• Estimated Demand
– Look for a price that the market expects
• EXPECTED PRICE is the price at which customers
consciously or unconsciously value it, usually expressed as a
range of prices.
– Estimate the sales volume at different prices.
• INVERSE DEMAND is the higher the price, the greater the unit
sales.
Competitive Reactions
– Directly similar products
– Available substitutes
– Unrelated products seeking the same consumer dollar
Other Marketing-Mix Elements

– Product – product’s price is also influenced by whether:
• it may be leased as well as purchased outright
• it may be returned by the customer to the reseller for a refund
or exchange
• a trade-in is involved.
– Distribution Channels – channels and types selected
– Promotion -- retailers will be charged lower price if they are placed
with promotional responsibilities.
46
Cost of a Product
– “AVERAGE FIXED COST CURVE” declines as output increases.
– “AVERAGE VARIABLE COST CURVE” is U-shaped.
– “AVERAGE TOTAL COST CURVE” is the sum of average fixed cost
and average variable cost.
– “MARGINAL COST CURVE” has a U-shape.
PRICE STRATEGY
Market-Skimming Pricing - setting high price in relation to the target market’s range
of expected prices.
Market-skimming pricing is appropriate when:

1. The new product has distinctive features strongly desired by
consumers.
2. Demand is fairly inelastic usually in the case in the early stages of a
product life cycle.
3. The new product is protected through such barriers as patent.
Advantages of Skimming Pricing

1. High profit margin so R&D costs are quickly recovered.
2. High prices can connote high product quality.
3. High price will curtail demand to levels that do not outstrip the firm’s
production capacities.
4. Greater flexibility --- firms can easily lower the price later when they
find out that the prices are too high.
Market-Penetration Pricing - setting relatively low initial price for a new product.
Market-penetration is suitable when :

1. A large mass market exists for the product.
2. Demand is elastic.
3. Substantial reductions in unit costs can be achieved through large-
scale operations or when there is economies of scale.
4. Fierce competition already exists or is expected to exist in the market.
47
Advantages of Market-Penetration Pricing
1. Immediately penetrate the market.
2. Generate substantial sales volume and a large market share.
3. Discourage other firms from introducing competing products.
GEOGRAPHIC PRICING STRATEGIES
1. Point-of-Production Pricing or “FOB factory pricing” or ( FOB mill

pricing ) – the seller quotes the selling price at the point of production, and the
buyer selects the mode of transportation and pays all freight costs.
- The seller pays only for loading the shipment abroad the freight carrier.
2. Uniform Delivered Pricing or “Postage Stamp Pricing” - the same

delivered price is quoted to all buyers regardless of their locations.
- Uniform delivered pricing is typically used where freight costs are a small
part of he seller’s total cost.
3. Zone-Delivered Pricing - divides a seller’s market into a limited number of

broad geographic zones and then set a uniform delivered price for each zone.
- The freight charge is an average of the charges to all points within a zone.
4. Freight-Absorption Pricing – manufacturer will charge a factory price

plus the freight costs that would be charged by a competitive seller located near that
customer.
- It is adopted to offset competitive disadvantages of FOB factory pricing.
- The supplier decides to absorb some freight cost as long as the net revenue
is larger than its marginal costs.
Freight absorption is useful when a firm has:

- Excess capacity
- High fixed costs
- Low variable costs per unit of product
48
SPECIAL PRICING STRATEGIES AND SITUATIONS
• One-Price Strategy - a seller charges the same price to all similar customers
who buy identical quantities of a product.
• Flexible-Price Strategy or “Variable-Price Strategy” - similar customers
may pay different prices when buying identical quantities of a product.
• Flat-Rate Pricing – a purchaser pays a stipulated single price and then can
consume as little or as much of the product as desired.
• Single-Price Strategy - all items are sold under the same single price.
• Pricing Lining involves selecting a limited number of prices at which a
business will sell related products.
• Odd-Pricing or “psychological pricing” is setting prices at uneven ( or
odd ) amounts.
• Leader Pricing - temporarily cut prices on a few items to attract customers.
– The items on which prices are cut are termed leaders; if the leader is
priced below the store’s cost, its a loss leader.
• High-Low Pricing – alternating between regular (high) and “sale” (low)
prices.
• Everyday Low Pricing (EDLP) - consistently low prices (on a frequent
basis).
• Resale Price Maintenance - manufacturers want to control the prices at
which middlemen resell their product to protect the brand’s image.
– Suggested List Price – price is set by a manufacturer at a level that
provides retailer with their normal markups.
Therefore, to set the product appropriated price, the company need to depend
it on many factors such as, expected demand, cost of product, competitors,
marketing mix, including with the product positioning that is the dictated price setting
factor.
We recommend using Market-Skimming Pricing strategy to set high price in

relation to the target market’s range of expected prices. And all items are sold under
the same single price or single price strategy at target market in Shanghai and
Beijing for showing company’s standardization. The selling price may differ by
different retailers and stores but it will be the same price for wholesales. The selling
price is 7 Yuan (90 g.)
49
COMPETITOR’S PRICES
There are too many competitors in China market. In the rural area, there are
many low price toothpaste products that produced from the local producer. In the
urban area, there are multinational competitors who hold the biggest market shares.
This below are the sample list of competitors in China.
CSA - Zhong Hua

Darlie - Darlie for Kids
Hawley & Hazel - Darlie Super Fluoro Natural Mint
Hung Cheong Hong - Jie Yin, Plant Essence Toothpaste
Kolynos - Kolynis Blue with Fluoride (Chinese Version)
LMZ - LMZ Super Strong Herbal Essence
LMZ - LMZ Super Strong Herbal Toothpaste Peppermint Flavor
NaFine - Fangganmao Yi Kou Jing Fang Gan Mao Zhong Cao Yao Ya Gao
Sensodyne - Sensodyne for Sensitive Teeth with Fluoride Fresh Mint
Shanghai Toothpaste Factory Co. Ltd. - Maxam Toothpaste with Fluoride, Original
Spearmint
Tianqi - Tianqi, Super tianqi medicated toothpaste, Soothing pain, Spearmint
Darlie
The black tea doubles key toothpaste 90g

￥6.20
(Goods number: 142,001)
The black tea doubles key toothpaste 160g

￥9.90
Black toothpaste 90g

￥4.90
50
Black toothpaste 225g
￥10.90
Black child toothpaste 40g

￥4.90
Black child toothpaste 40g

￥4.90
LG Bamboo
LG bamboo salt bear's gall drug efficacy
toothpaste 90g ￥9.80
LG bamboo salt bear's gall drug efficacy
LG bamboo salt primary white toothpaste 145g

￥11.80
LG bamboo salt primary white toothpaste 105g

￥8.90
COLGATE
51
Gao Lujie Czechoslovakia tooth Bai Meibai
Gao Lujie Czechoslovakia tooth white beautiful
white liquor 10ml ￥69.90
Gao Lujie entire effect beautiful white toothpaste
100g ￥6.50
Gao Lujie entire effect toothpaste 100g

￥7.50
Gao Lujie toothpaste fresh 200g

￥9.90
Gao Lujie toothpaste peppermint 140g

￥7.90
Gao Lujie bee glue fluorine calcium toothpaste
120g ￥7.30
Gao Lujie bee glue fluorine calcium toothpaste
200g ￥9.90
52
Gao Lujie ice crisp toothpaste delicate fragrance
lemon 100g ￥7.20
Gao Lujie ice crisp toothpaste natural tea fragrant
100g ￥7.20
Gao Lujie ice crisp toothpaste icy cold peppermint
taste 100g ￥7.90
CREST
The good clean gentleman sparkles 浜櫧
Good clean gentleman pure white toothpaste 120g

￥7.70
Good clean gentleman pure white toothpaste 165g

￥9.90
Good clean gentleman white crisp white
Good clean gentleman white crisp white
53
The good clean store gathers toothpaste 120g
￥7.70
The good clean store gathers toothpaste 165g

￥9.90
The good clean gentleman at night multiple-effect
nurses toothpaste 120g ￥7.70
The good clean gentleman at night multiple-effect
nurses toothpaste 165g ￥9.90
Good clean gentleman tea clean worm-preventing
toothpaste ￥2.90
Chinese - CSA - Zhong Hua
Chinese key tooth white toothpaste 90g

￥2.80
Chinese key tooth white toothpaste 155g

￥4.10
Chinese gold plating entire effect toothpaste 100g

￥4.10
54
Chinese gold plating entire effect toothpaste 135g
￥5.50
Chinese worm-preventing toothpaste peppermint
120+10g ￥2.40
Chinese toothpaste worm-preventing fresh 170g

￥3.30
Chinese entire effect + 浜櫧 toothpaste 90g

￥4.90
Chinese entire effect + 浜櫧 toothpaste 130g

￥6.20
Chinese herb 5 treasures toothpastes 120g

￥2.40
Chinese herb 5 treasures toothpastes 170g

￥00
Chinese Chinese medicine toothpaste 120+10g

￥2.40
55
Chinese Chinese medicine toothpaste 170g
￥3.30
Chinese white clear toothpaste 75g

￥2.80
Chinese white clear toothpaste 130g

￥4.10
LMZ
LMZ Herbal Toothpaste with Pricklyash and

$4.99
Gingko for Gum Protection - Fresh Mint
(Source :
1. http://www.cpmall.com.cn/Product/Index.aspx?ProductCataID=59
2.http://www.cpmall.com.cn/Product/index.aspx?
showType=&PageSize=&ProductCataID=59&ProChannelID=0&KeyWord=&BrandID=&Sorts
=&PageNo=3
3. http://www.amazon.com/gp/product/B000FH7YK2/102-8789298-1600123?
v=glance&n=3760901
4. http://www.globaldrugs.com/chinese/4510.htm
5. www.westons.com
)
56
Section 3: Place
The company should focus on urban market that has high purchasing power
and consumption. Three are three targeted provinces in China as shown below.
Shanghai (English meaning of name : Above the Sea)
Geographic
Area : 6340.5 km2
Population (2002) : 16,250,000
Population density : 2563/km2
Major Nationalities (2000) : Han 99%,Hui 0.4%
Organization : 19 counties; 221 townships
57
Economic
GDP (2002) : 540.9 billion yuan
GDP per capita : 33,285 yuan
Agriculture : edible fungus, flowers, vegetables
Foreign direct investment (2002) : US$5.03 billion
Industry : automobiles, bicycles, chemicals, electrical appliances, electricity

generation equipment, electronics, petrochemicals, sewing machines, steel, synthetic
detergent, telecommunications equipment, tractors
Transportation
Airports : Shanghai Hongqiao (SHA); Shanghai Pudong International (PVG)
Highways/railroads : two completed ring roads with a third under construction; five
radial expressways connect Shanghai with Nanjing, Hangzhou, Pudong and other
nearby cities; rail lines extend to Nanjing, Hangzhou and Ningbo
Major ports : Shanghai harbor is the biggest seaport in China; the Yangtze River
connects the city with upstream destinations like Wuhan and Chongqing; inland
waterways extend to Jiangsu, Zhejiang and Anhui provinces
Office Contact Information
Regional government office address : 19 Gao'an Road, Shanghai
Telephone : (86)(21)6321-2810
Website (Chinese) : www.shanghai.gov.cn/
Website (English) : www.shanghai.gov.cn/shanghai/node8059/index.html
Source : http://atimes.com/atimes/Others/shanghai.html Accessed on 16 Jul 2006)
58
Beijing (English meaning of name : Northern Capital)
Geographic
Area : 16,808 km2
Population (2002) : 14,230,000
Population density : 847/km2
Major Nationalities (2000) : Han 96%, Manchu 2%, Hui 2%, Mongol 0.3%
Organization : 18 counties; 318 townships
Economic
GDP (2002) : 321.3 billion yuan
GDP per capita : 22,577 yuan
Foreign direct investment (2003) : US$2.15 billion
Industry : automobiles, chemicals, construction, electronics, financial services,

machinery, pharmaceuticals, textiles, tourism
59
Agriculture : Beijing white pears, cotton, grapes, maize, millet, mushrooms, peanuts,
pears, persimmons, potatoes, rice, roses, sesame, soybeans, tobacco, wheat, wild
jujubes
Transportation
Airports : Beijing Capital International Airport (PEK), Nanyuan Airport (NAY)
Highways/railroads : 20,000 km of highways including 813 km of expressways with

four completed ring roads; eight major rail lines radiate from Beijing in all directions,
including international services to Russia and North Korea
Major ports : none (the municipality is landlocked); Tianjin is the closest major
seaport
Office Contact Information
Regional government office address : 2 Zhengyi Road, Dongcheng District, Beijing

100-001
Telephone : (86)(10)6519-2233
Website (Chinese) : www.beijing.gov.cn/
Website (English) : www.ebeijing.gov.cn/
(Source : http://atimes.com/atimes/Others/beijing.html Accessed on 16 Jul 2006)
60
Shanghai, Beijing are not the big province in China, but all two provinces are
in business area. There are a huge number of populations in these two provinces as
30.48 million people (~45% of Thailand population). GDP per capita is very high as
22,557 - 33,285 yuan. There are many ways for transportation from Thailand to
Shanghai. These two provinces are represented as the urban market in China as
well.
There are three places we can penetrate our product and have enough
potential to be our selling point for our target customer.
1. Department Store/Supermarket : Retail

establishment that sells a wide variety of
goods. These usually include ready-to-
wear apparel and accessories, yard
goods and household textiles,
housewares, furniture, electrical
appliances, and accessories. There are many department stores in
Shanghai and Beijing. The company should have small display in the
department store to promote product. Fortunately, Super Brand Mall is the
big department store that owned by Thai company. We will focus on this
department store first.
Super Brand Mall is owned by CP Group

that founded more than 80 years ago, the
Bangkok, Thailand based Charoen Pokphand
Group (CP Group) maintains an extensive network
of 250 companies across 20 countries. The group
employs more than 150,000 people worldwide, and
is one of the largest international investors in
China.
As one of Asia’s leading global conglomerates with it’s China headquarters in

Shanghai, the CP Group’s multi-billion US dollar business portfolio includes
61
investments in agriculture, media, telecommunications, manufacturing, logistics,
financial services, petrochemicals, international trading, retail and real estate.
List of Department Stores in Shanghai and Beijing
Department Stores in Shanghai
Super Brand Mall 168 Lujiazui Lu(near Oriental Pearl Tower)Shanghai, China Tel.
+86(21)6887-7888 web site : http://www.superbrandmall.com
Hong Qiao Friendship Shopping Center No. 6, Zun Yi Road (S) Shanghai, China
Huating Isetan Department Store No. 527 Huai Hai Zhong Road Luwan District
Shanghai, China
Jiu Guang City Plaza No.1618 Nanjing Xi Lu, Jing An District Shanghai, 200040,
China Tel.: 0086-21-62497556-229
Pacific Department Store-Luwan No. 333, Huai Hai Road (M) Luwan District
Shanghai, China Tel: 862-1530-68888
Pacific Department Store-Xuhi No. 932 Hengshan Road Xuhui District Shanghai,
China
Parkson Department Store No. 918 Huaihai Zhong Road Luwan District Shanghai,
China
Shanghai No. 1 Yaohan No.501 Zhang Yang Road, Pudong Shanghai, China
Department Stores in Beijing
New World Department Store No. 3, Chongwenmen Wai Street Chongwen District
Beijing, China
One World Department Store No. 99, Wang Fu Jing Street Dong Cheng District
Beijing, China
Oriental Plaza No. 1, East Chang An Ave Dong Cheng District Beijing, China
Parkson Department Store No. 101 Fu Xingmen Nei Street Xicheng District Beijing,
China
Shuangan Department Store No. 38 Bei San Huan West Road Haidin District
Beijing, China
SOGO Department Store No.8, Xuan Wu Men Wai Street Xuan Wu District Beijing,
China
62
Youyi Shopping City Beijing Lufthansa Center No. 52 Liang Ma Qiao Road
Chaoyang District Beijing, China
Zhongyou Department Store No. 176 Xi Dan Bei Street, Hua Lan Tower Xicheng
District Beijing, China
2. Convenient Store : Small centrally located store featuring ease of

access, late-night hours, and a limited line of merchandise designed for
the convenience shopper. Convenience stores charge above-average
prices compared to large supermarkets that generate large-volume sales.
The easy way for people to buy toothpaste is in convenient store. There
are too many convenient store in Beijing and Shanghai.
3. Hospital/Dental Clinic : Institution for diagnosing and treating the sick or

injured, housing them during treatment, examining patients, and
managing childbirth and also about the teeth problem. The twin lotus
toothpaste will show in the counter with brochure. The patient will easy to
see and they will think the product in hospital will provide good quality for
them.
63
Section 4: Promotion
Promotional programs and tactics of company will create follow the way to
entry in China market. We consider by product attributes, product positioning, price,
place and related others. The first step of entry strategy is international and domestic
trade fair and the second strategic alternative is exportation. These two strategies will
cope with the possible promotion of Twin lotus.
Target audience
According to our target customer, our target audience is the urban

populations who are interested and tend to purchase herbal toothpaste of Twin
lotus’s product.
The objectives of promotional programs
• To introduce our target customer about Twin lotus’s product.

• To inform our target customer about product information.
• To create brand recognition and positive attitude toward the product.
• To encourage and persuade customer’s purchase.
Sales Target (approximately): 1,200,000 tubes per year (1% Market Share)
Promotion alternatives programs
We will consider by pros and cons or criteria and then we will recommend
the effective promotion programs and their practical implements.
1. Television commercial (TV advertising)

Television advertising is one of the major types of media advertising
Pros
• Combines sight sound and motion which is more appealing to customers’
senses.
• High attention given by customers
• High reach to the customers.
• Provides better knowledge of the product.e.g infomercials
64
Cons
• High cost
• High clutter
• Fleeting exposure
• Less audience selectivity
2. Event sponsorship with related Associated.
Pros
• Fund raising for non profit organization
• Draws attention to the new products
• Promotion and positioning of the brand name
• Establishes new and better links with associates
• Attracts new customers from the related associated company
• Customer education
Cons
• High cost
• Difficult to select the suitable event. Big event is related to high cost
but not guarantee the returns. Small event has low cost but lower
effectiveness.
3. Trade show/ Exhibition
Event sponsorship is one of the major types of trade promotion tools for
which the manufacturers devote 46.9% of the promotion whereas the
consumer promotion consists of 27.9% with media advertising capturing
25.2%.Business marketers spend around 35% of their annual promotion
budget on trade shows. More than 5600 trade shows takes place every year
attracting 80 million attendees.
Pros
• Best for introducing new products
• Maintains huge customer contacts
• Generates new sales lead
• Attracts new customer
• More sales to the present customers
• Educates customers with publications, videos, and other audiovisual
materials.
Cons
65
• Cannot attract huge customers as expected if the customers are not
informed well.
• Big chance of missing the display because of massive product lines.
4. Publicity
Pros
• Assisting in the launch of new products
• Assisting in repositioning a mature product
• Build interest in a declining product category
• Influencing specific target groups
• Defending products that have encountered public problems
• Building awareness and brand knowledge
• Lower cost than advertising
Cons
• Awareness time is short
5. Newspaper advertising
Pros
• It is highly flexible
• It can be done as per the required time as per the wish of the advertiser
• It has good local market coverage
• Accepted broadly
• It is highly believable
Cons
• It has short life
• Poor reproduction quality
• Small pass along audience
6. Magazine advertising.
Pros
• High geographic and demographic selectivity
• Credibility and prestige
• High quality reproduction
• Long life
• Good pass along readership
Cons
• Long ad purchase lead time
• Some waste circulation
66
• No guarantee of position
7. Radio advertising
Pros
• Used by massive audience
• High geographic and demographic selectivity
• Lower cost
Cons
• Audio presentation only
• Lower attention than television
• Non standardized rate structures
• Fleeting exposure
8. Yellow pages advertising
Pros
• Excellent local coverage
• Is highly believed
• Wide reach
• Low cost
Cons
• High competition
• Long ad purchase lead time
• Creative limitations
9. Outdoor advertising.
Pros
• It is highly flexible
• High repeat exposure
• Low cost
• Low competition
Cons
• Limited audience selectivity
• Creative limitations
10. Brochure
Pros
• Flexibility
67
• Full control
• Can dramatize messages
Cons
• Overproduction could lead to runaway costs
11. Direct mail
Pros
• Audience selectivity
• Flexibility
• No ad competition within the same medium
• Personalization
• Allows early testing and response measurement
Cons
• Relative high cost
• Junk mail image
12. Interactive media advertising(websites/Internet)
Pros
• High selectivity
• Interactive possibilities
• Relatively low cost
Cons
• Relatively new media with a low no of users.
Criteria for selecting the promotion programs and recommendation:
1. Budget requirement
2. Target approach
3. Ability to give the information and ability to achieve its objectives
4. The policy of the company including with limitation of communication law.
The first promotional program is trade show and exhibition. Our new
product pipeline is full with innovations that address diverse consumer needs using
new ingredients and innovative packaging and design. Increased focus on consumer
and shopper insights is identifying new consumer benefits, helping to anticipate
future trends and expanding the knowledge. The company are increasingly benefiting
68
from understanding Chinese consumer habits and preferences and developing
products that address them.
According to the situation of our product to launch in Chinese market, we

should focus more on magazine advertising because our target market is the urban
area with customers who have the potential to by our product. The urban population
consists of population who are trendy, fashionable and up to date for which the
magazine would be very suitable. Since we are targeting the urban population, it’s
considered good to use advertising media than the promotional media such as,
outdoor advertising and interactive media advertising in order to reach the target
segment during its initial stage of entering the Chinese market which could then be
followed by different promotional strategies once the product is able to build its image
in the eyes of the customers.
69
CHAPTER 5 : Quantified Budget
SECTION 1 : FORECASTED INCOME
The below information is our quantified budget. It base on internet

information, Thai export department, interview, and also under our estimation. Due to
Twin Lotus Budget and Financial statements are not given. The market size in China
also could not be found. Then some numbers are under estimation based on relevant
information that our group found only.
Revenue
China population = 1.3 billion
Toothpaste tube in 2005 = 5.2 billion tubes
Tubes per year = China population / Toothpaste tube in 2005
Population in cities = 30.43 million (Beijing and Shanghai )
Toothpaste usage = Pop. in Cities x Tubes per year
Target Market share = 1%
Amount of sell (per year) = Toothpaste usage x % of Target Mkt. Share
Selling price = 7 Yuan (100 g.) (Average price)
Sales Revenue = Amount of sell (per year) x Selling price x
Thai currency exchange rate
Cost
Product Cost = 15 Baht (100g) (Approximately 60% of
Product price)
Cost of Goods Sold = Amount of sell (per year) x Product Cost
70
Cost of transportation :
Toothpaste box size (100g.) = 13 cm x 2.8 cm x 2.5 cm = 91 cm2
Ocean Freight (Leam Chabang ,Pat / Shanghai) = Container for 40 ' DC
= size 2.35 x 2.39 x 12.04 M. = 67.62 m2
= ~7000 Toothpaste boxes per container
Cost of transportation by Ship = Amount of sell (per year) / Ocean Freight
Cost of transportation from Shanghai to Beijing (by bus) = ~ 500,000 Baht
Total transportation Cost = Cost of transportation by Ship + Bus
Tax
VAT Rate = 17%
VAT = Sales Revenue x VAT Rate
Import Tax Rate = 13%
Import Tax = Cost of Goods Sold x Import Tax Rate
Income Tax Rate = 24% (Special rate in Shanghai & Beijing)
Income Tax = Sales Revenue x Income Tax Rate
Total Tax = VAT + Inport Tax + Income Tax
Others Expenses
Human Resource Management Expense (Salary + Benefit + Allowance + Air Ticket)

= ~3,000,000 Baht
71
Cost of Rental (Office) = 100,000 Baht/month
Advertising expense = 5,000,000 Baht
Revenue sharing = 10%
Total cost = Cost of Goods Sold + Total

transportation Cost + Total Tax + Human Resource Management Expense + Rental
+ Advertising expense + Revenue sharing
Income
Net income = Sales Revenue – Total cost
72
Quantified Budget (First Year, 2007)
Revenue
Toothpaste Usage 121,720,000 China population 1.3 Billion
Toothpaste
Amount of sell (per year) 1,217,200 Tubes'2005 5.2 Billion
Target Mkt. Sales 1% Tube per year 4
Thai Currency Exchange Rage (per RMB) 5 Population in Cities 30,430,000 people
Selling Price (100 g.) 13
Sales Revenue 79,118,000
Cost
Product Cost 15
Cost of Goods Sold 18,258,000
Cost of transportation :
By ship 3,390,771
By bus 500,000
Total Cost of transportation 3,890,771
Tax
VAT 13,450,060 VAT 17%
Import Tax 2,373,540 Import tax rate 13%
Income Tax 18,988,320 Income tax rate 24%
Total Tax 34,811,920
Others Expenses
Human Resource Management
Expense 3,000,000
Rental Office Expense 1,200,000
Advertising expense 5,000,000
Revenue sharing 7,911,800 10% of Selling Price 10%
Total Expense 17,111,800
Total Cost 74,072,491
Income
Net Income 5,045,509
73
CHAPTER 6:
Recommendation&Conclusion
Section 1: Conclusion
Action Plan
First Step (Year 2007-2009, First 3 years):
1. The same package, same formula but need to translate to mandarin language.
2. Promote the product in proper media such as local newspaper, brochure
(Selling point in department stores and hospital/clinic)
3. Try to get quality and safety license in China.
4. Find more information about building manufactory in China or find the business
partner.
5. Market research is required in field of consumer needs and product innovation.
Second Step (Year 2010-2014):
1. Launch new toothpaste product : New design/packaging and formula

2. Launch more products as hair care and skin care
3. Expand to other urban areas
4. Build manufactory in China to reduce cost.
Third Step (Year 2015):
1. Expand to rural market by create new products with low cost
2. Enter to other countries such as Hongkong, Taiwan, Japan.
74
Section 2: Recommendation
There is many customers’ right protection in laws and regulations of China
rather than Thailand such as, brand name, different meaning of price tag’s color,
standard quality, production source, and other product information. Those
attributes need to concern much on the Chinese customer.
To penetrate China market, first business source could find out from
Chinese website. However, website’s information may outdate, we need to search
the fact and important figures from related international institutions. We
recommend to purchase other related sources from toothpaste market research in
China also.
Import and export international trade fair include special product exhibition
were supported by Chinese government to show many products in many areas of
China. Thus, this activity is one opportunity to run business of Thai product.
However, we have to set our objectives to enter the international trade fair such
as, doing market research, observing trade opportunity or observing competitors.
This is a time for entry the business into China. Especially now China is the
member of WTO, so the company would be supported for China international trade
organization more than past. China population have higher income and want good
quality of product as same as developed countries. The important strategy is to
analyze the strengths and weaknesses of competitors in China market and
International market also.
We recommended export for entry mode in China and positioning the

product more premium than Thai market. According to the objectives, we avoid
risk from introductory stage in China by saving production cost. We maintain the
same product and same quality but adjust a little in packaging.
The next future plan if the export is success, we recommended to establish

Twin Lotus’s manufactures to produce the products for Chinese market and target
more target market in the long run.
Thai natural herbs are famous in healthy and spa. We would like to make
innovative product by creating new formula at the same price to add its value,
quality, standard, and demand. For example, Lhaw wod leaf (ใบเหล้ า วอด) is Thai
75
natural herb in the Northern part of Thailand. It’s good for growth in low
temperature. Thai local primitive knowledge uses it for reduce strong smell in Thai
whiskey, and any water. It’s possible to use this herb into product’s ingredient for
the future after researching and testing laboratory from the company.
76
References
http://www.twinlotus.com
http://www.atimes.com/atimes/China/china-map.html
http://chinasuppliers.alibaba.com/search/china_products/Toothpaste.html
http://gbcode.tdctrade.com/gb/my.tdctrade.com/airnewse/index.asp?id=6556
www.personalcaremagazine.com/story.asp?id=715
http://chinasuppliers.alibaba.com/search/china_products/Toothpaste.html
http://query.nytimes.com/gst/fullpage.html?res=9F0CE7DD103DF93BA25752C1A965958260
http://www.made-in-china.com
http://en.ce.cn/Industries/Consumen-Industries/200605/12/t20060512_6942069.shtml
http://english.sina.com/business/1/2006/0514/75709.html
http://www.newsgd.com/culture/peopleandlife/200504210061.htm
http://www.amazon.com/gp/product/B000FH7YK2/102-8789298-1600123?
v=glance&n=3760901
http://www.globaldrugs.com/chinese/4510.htm
www.westons.com
http://WWW.TOOTH-PASTE.COM.CN
http://english.china.com/zh_cn/business/news/11021613/20060710/13458336.html
http://www.nihaoouzhou.com/articles/news/200602/7734/en/
http://en.ec.com.cn/pubnews/2004_02_20/200551/1003710.jsp
http://www.cpmall.com.cn/Product/Index.aspx?ProductCataID=59
http://www.cpmall.com.cn/Product/index.aspx?
showType=&PageSize=&ProductCataID=59&ProChannelID=0&KeyWord=&BrandID=&Sorts
=&PageNo=3
http://www.amazon.com/gp/product/B000FH7YK2/102-8789298-1600123?
v=glance&n=3760901
http://www.globaldrugs.com/chinese/4510.htm
www.westons.com
77

Twin Lotus

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BM6806 : International Marketing Management

GROUP CASE STUDY

CHAPTER 1: COMPANY AND PRODUCT BACKGROUND 3

SECTION 1 : OUR COMPANY 3

SECTION 2: PRODUCT BACKGROUND 8

CHAPTER 2 : MARKET ANALYSIS 13

SECTION 1 : COUNTRY BACKGROUND 13

SECTION 2 : COMPETITOR ANALYSIS 25

SECTION 3 : SWOT ANALYSIS 32

SECTION 4 : TARGET ANALYSIS 34

CHAPTER 3 : ENTRY STRATEGY 36

SECTION 1 : ENTRY MODE ALTERNATIVE 36

SECTION 2 : CHOOSING THE ENTRY MODE 41

CHAPTER 4 : MARKET STRATEGY 43

CHAPTER 5 : QUANTIFIED BUDGET 70

SECTION 1 : FORECASTED INCOME 70

CHAPTER 6 : CONCLUSION AND RECOMMENDATION 73

Section 1: About the Company

Company Established: 7 August 1989

Dr.Boonkit Leelertphan: President of Twin Lotus Group

Ms.Sunantha Leelertphan: Vice President of Twin Lotus Group

Ms. Chitlada Leelertphan : Managing Director of Finance

Mr. Jakkapat Leelerdphan : Managing Director of Hotel and Resort

Mr. Piti Leelerdphun : Managing Director of Marketing

Mr.Bundid Leelerdphun : Managing Director of Production

Mr. Kamthon Leelerdphan : Managing Director of Beijing RO

Mr. Prasopsak Angsuthornchai : Human Resource Manager

Ms. Kobkamol Leelerdphan: Assistant Managing Director of Hotel &

There are 3 category products as below

Soap: Twin Lotus Herbal Soap

Twin Lotus Herbal Toothpaste, Original formula

Twin Lotus Herbal Fresh and Cool Toothpaste

Twin Lotus Herbal Soap

Twin Lotus Bathing Cream

Twin Lotus Herbal Shampoo Extra for Dropping Problem

Twin Lotus Herbal Serum Shampoo

Twin Lotus Herbal Serum Conditioner

Section 1: Country Background

There is about 22 percent of total population in the world. China population is

The People's Republic of China is a unified, multi-national country,

Chinese family names came into being some 5,000

China is a multi-religious country. Buddhism, Taoism, Islam, Catholicism and

ECONOMIC GROWTH (1995-2005)

Year Economic Growth Rate

Economic Growth Rate

Chinese Money is called Renminbi (RMB) (means "People's Currency"). The

CHINESE CITIES AND PROVINCE

The total number of Chinese cities is 666.

The number of Mayoress in China is 375;

There are 5 provinces with population over 50 million (2001)

Shanghai, 12,665,000 (metro. area), 10,996,500 (city proper);

There are 3 ways to entry China as below:

Air: Beijing, Chengdu, Dalian, Guangzhou, Hangzhou, Harbin, Hohhot, Hong

Land: Alataw, Baketu, Erenhot, Friendship Pass, Hunchun, Ji'an, Kunjirap,

Water Beihai, Dalian, Dangdong, Guangzhou, Haikou, Hankou, Huangpu,

Railways: total: 71,898 (2002).

(Unit USD$ 1 billion)

CHINA’S TOP 10 TRADING PARTENER IN 2000*

(Unit US$ 1 billion)

Country & Country &

Source: Government Publication Beijing Review Vol. 43 No. 14

(Unit US$ 1 million)

Source: http://elsa.berkeley.edu/~yqian/econ162/econ162%20topic10s.pdf (Accessed on 10