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Gain-ing China

Caitlin Cummins, Will Longhini, Eric Palm, Anja Redzepagic, Jenna Toon

Overall Market Potential and Specific Marketing Objective

Chinese Laundry Care Market


100,500,000 potential users

In 2013, Chinese textile washing products market forecast to have a value of $4.6 billion

97% of households own a washing machine


Liquid detergent sector fastest growing segment, and well placed for even further growth

Target Segment

Target
Women Ages 20-60 Primary domestic caretakers
Own home Home employed to manage

Primary household item decision makers


Responsible for necessary laundry duties

Buyer Behavior

Consumer Shopping
How China Shops How the United States Shops

Brand Loyalists 23% 28% 11% Deal Makers Price Seekers 23% 26% Luxury Innovators 17% 35% 37%

Brand Loyalists Deal Makers Price Seekers Luxury Innovators

Buyer Behavior
No large divide among shopper style preferences favored by Chinese consumer Nearly all Chinese use cold water when doing laundry Common among users to hand-wash items first then use the washer to rinse clothing Liquid detergent has surpassed powder use in Beijing, Shanghai, and Guangzhou

Product Analysis

Gain Product Analysis


Primary focus liquid detergent
Must provide powder detergent alternative

Use of the color red


Joy and good fortune

Careful use of powerful scents


Youthful fruit scents; flower power

Key Competitor Analysis

Key Competitors
Domestic
NICE Group Guangzhou Liby Enterprise Group Co. Ltd.

Global
Unilever China Ltd.

*Account for 40% of the Chinese Laundry Care Industry

Key Competitors
Chinese Laundry Care Market
NICE Group

Guangzhou Liby Enterprise Group Co Ltd Procter & Gamble

Unilever

Guangzhou Liby

Strengths: Wide product portfolio 100 products Active player in innovation Concentrated label 2008 Beijing Olympic sponsor

Weaknesses: Low profit margin

Strengths:
NICE Group Extensive distribution channels in rural areas Concentrated label Entry into Personal Care products gives new growth area

Weaknesses:
Large focus on economy priced products

Unilever China Ltd.

Strengths Economies of scale Weaknesses No nationalism feel Dilution of brand names Hurt collective feeling in Chinese culture

Implementation Objective

Implementation
Utilize growing popularity of mass merchandisers in China
Walmart and Carrefour

Cannot neglect local, independent retailers and convenience stores

Method of Entry

P&G Manufacturing and Distribution


P&G owns 10 plants throughout China
Convert Guangzhou plant to accommodate Gain production New, $130 million regional distribution center in Guangzhou Keep majority of operations in-house and under P&G control

China National Foreign Trade Transportation Corporation


Outsource all logistical functions
Shipping and warehousing

Offer freight forwarding, shipping, storage, marine transportation, and trucking services throughout China

Owned and controlled by Chinese national government


Guaranteed access to market and better protection

Placement Analysis

Placement
Walmart and Carrefour
Over 100 retail outlets each Hypermarket expansion Expanding market share through acquiring small, local, retail shops

Walmarts practice of local sourcing


20,000 partnerships with Chinese suppliers 95% of its merchandise from local sources 99.9% of Chinese associates are Chinese nationals

Price Analysis

Gain Pricing
United States
70 oz. box of Tide $10.99, $.15/oz. 63 oz. box of Gain $8.99, $.14/oz.

China
77 oz. box of Tide $3.50, $.05/oz. Gain - $.05/oz.

$.15/oz. $.14/oz.

X $.05/oz.

= $.053/oz.

Gain Retail Prices


1-liter jug of liquid detergent (33.8 oz.)
$1.71/unit, $.0506/oz.

-liter jug of liquid detergent (16.9 oz.)


$.90/unit, $.0533/oz.

1,000g powder detergent (35.2 oz.)


$1.80/unit, $.0511/oz.

500g powder detergent (17.6 oz.)


$.95/unit, $.054/oz. *Government interaction and incentives have made it less expensive to produce and sell liquid detergent.

Promotion Analysis

Promotion
Continue to brand Gain as
The best smelling laundry out there.

Equating signature scent with clean laundry


Create a positive experience

Initial promotion efforts in urban areas


Beijing, Shanghai, and Guangzhou Consumers have adopted liquid detergent use

Television
CCTV Chinas most watched TV channel 97% of households in target cities own a TV Commercials most effective P&G already recognized as Chinas number one television advertiser

Print
If you have something important to say, say it in print!

P&G is Chinas fourth largest magazine advertiser Print and magazine advertising
Family, Readers, City Beauty, Womens Day and Womens Friend

Retail
In-store promotions Product displays Free trial samples
Trial is crucial in first year of introduction

Advertising
Ad Expense
8 7 6 5 4 3 2 1 0 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Millions

Ad Precentage

Ad Expense

Ad Precent age

Financial Analysis

Net Sales
Millions 45 40 35 30 25 20 15 10 5 0 2012 2013 2014 2015 2016

Cost of Goods Sold


Millions 25 20 15 10 5 0 2012 2013 2014 2015 2016

Transportation Costs
1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 2012 2013 2014 2015 2016

Earnings Before Interest and Tax


Millions 6 5 4 3 2 1 0 -1 -2 -3 -4 2012 2013 2014 2015 2016

Pro Forma Income Statement

5 Year Projections

NPV

5 Year Projections

Recommendation

Procter & Gamble should enter Gain into the Chinese market now.
Market is fragmented, but prime for a new, highly specialized, detergent to enter market and command market share.

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