罗兰贝格-德国汉高公司进入中国市场策略项目建议书.ppt

Nirmainterim-rpt,Achieving leadership in China detergent market Project proposal Henkel(China)Investment Co.Ltd.,Roland Berger&Partners International Management ConsultantsBarcelona Beijing Berlin Brussels Bucharest Budapest Buenos Aires Delhi Detroit Dsseldorf Frankfurt Hamburg Kiev Kuala Lumpur LisbonLondon Madrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna Zurich,Nirmainterim-rpt,ContentsPage,A.Fierce competition from international and domestic players has imposed 3 great challenge on HenkelB.To achieve turnaround,Henkel should adopt an aggressive expansion strategy 10C.Roland Berger will help develop the appropriate strategy:project outline12D.Project organization and time frame 22E.Value of the project 12F.Roland Berger is a best partner of Henkel to exploit China detergent market:12 selected referenceAnnex A:Case study-Qiqiang32Annex B:Case study-P&G42,A.Fierce competition from international and domestic players has imposed great challenge on Henkel,Nirmainterim-rpt,After fast increase in earlier 1990th,annual growth of China detergent market has slowed down in these years,National market volume of laundry detergentin Mio.tons,1993,1994,1995,1996,1997,2000*,*Estimation,Source:Chinese light Industry Yearbook(1999),Roland Berger&Partners analysis,1.9,2.2,2.8,2.6,2.7,2.93.0,+8.2%p.a.,23%p.a.,Nirmainterim-rpt,Overcapacity in detergent indudstry leads to price reduction and thus reduces the product profitability,At present,there are about 150 manufactures in detergent industry with capacity of 3.8 million tons,but total market volume is about 2.7 million tons,so the utilization rate of capacity is about 70%Marekt entry of detergent industry is pretty low and there lies a lot of unregistered factories,If taking their capacity into account,the utilizaition rate will be furthur reduced to about 50%-60%,11%,1998年,1999年,3%,Tide,OMO,18.0,16.5,18.8,Whitecat(regular powder),1998年,1999年,Average price reduction of the whole industry is 10%,Nirmainterim-rpt,After having established prominent position in high end market,P&G and Unilever begin to penetrate middle and low end market,Market structure of high end(Price：10RMB/Kg),Market stucture of middle end(Price：710RMB/Kg),Market structure of low end(Price：7RMB/Kg),Proportion of high end market is 11.9%,Proportion of middle end market is 31.8%,Proportion of low end market is 56.3%,P&G,Others,Benckiser,Unilever,P&G,Benckiser,Others,Henkel,Henkel,Unilever,Others,Resource:AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Brand Share CompanyTide 6.0%P&GAriel 2.2%P&GOMO 2.4%UnileverPower 28 1.1%BenckiserPersil 0.1%Henkel,Market share of international playersbrands in different segment,Brand Share CompanyGFL 2.2%P&GPanda 1.9%P&GWIPP 1.0%HenkelTianjin 1.8%HenkelDosia 1.0%Benckiser,Market stucture of middle end(Price：710RMB/Kg),Market structure of low end(Price：7RMB/Kg),Brand Share Company Fangcao 2.5%Unilever Yunquan 0.8%Unilever Sunlight 0.2%Unilever Seagull 2.9%Henkel Tiantian 1.5%Henkel Guilin 1.2%Henkel,Market structure of high end(Price：10RMB/Kg),Resource:AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Nirmainterim-rpt,Although a late comer,Benckiser has successful penetrated north market with Dosia through well-designed entry strategy,Through acquiring distributors from P&G,Dosia chose Liaoning province as its initial entry areaIn Heilongjiang and Jilin province,competitors are not so strong as that in other parts of China.local brands,such as Tiantian,are in dominant positions,so Dosia chose these two province as subsequent penetration areasCompetition is in choas in Shandong,and distribution network is not well regulated with lots of small distributors/wholesalers competing with each other,so it is easy for Dosia to penetrate the market and cultivate its qualified disbition channelIn order to guarantee the success,channel penetration is also backed up by strong advertisement champaign,Marekt share of Dosia in north China,Jan 1999,Mar 1999,May 1999,Jul 1999,Sep 1999,Nov 1999,Jan 2000,Resource:AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Some domestic players are also making efforts to achieve fast growth and national presence,Market share of Qiqiang,Market share of Libai,Resource:AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,Fast growths of domestic players are supported by their rural focus strategy,nationwide manufacturing network and direct sales model,Market penetration strategy taken by fast growing domestic players,Rural focus strategy,Nationwide manufacturing network,Direct sales model,Rural market is large but is dominanted by weak regional brandsInternational players have weak performance in rural area,Logistic cost is high in detergent industry accouting for over 10%in total value Long distance transportation in China is not oonvient,For a new comer,it is not easy to get qualified local distirbutors,Reason,Method,Result,First penetrate rural market and townAfter achieving strong perfromance in rural area,then penetrate city and large county,Acquiring local players in different areas(Qiqiang)Signing OEMcontracts with local players in different areas(Guangdong Libai),Directly selling products to low level dealers or retailing outletstrong channel promotion,Avoiding competing with strongs playersGaining market share with comparatively low marketing investment,Avoiding competing with local playersReduction in logistic cost,Fast market penetrationBut the sales expense is high and the sales force should be very diligent,Nirmainterim-rpt,In order to achieve turnaround,Henkel should adopt an aggressive expansion strategy,Six regional brands with comparative weak market performance,Deterioration of market share for each brand,defeated by strong international or domestic brands one by one,Aggressive expansion strategy,No change,Turnaround point,Leadership in detergent market,Nirmainterim-rpt,Strategy formulation should be based on full understanding of China detergent market and full consideration of three strategic issues,Strategy formulation,Choice of focus brand and strategic expansion route,Establishing reliable and low cost logistic network,Developing rural entry model,Full understanding of China detergent market,Nirmainterim-rpt,Per capita consumption gradually decreases from south to north and from east to west,Consumption of laundry detergent in Chinakg,per capita,Source:Roland Berger&Partners interview,1.88,23 kg per capita,1.72 kg per capita,1.7 kg per capita,3 kg per capita,1.88,1.88,1.95,2,1.8,2,1.95,3.35,1.95,1.95,2.35,2.35,3.35,1.68,2,1.68,1.68,2.35,Much low area,Nirmainterim-rpt,2512(Shanghai),The high population density is located in the North China plain,Source:Roland Berger&Partners interview,146(Jilin),343(Hebei),586(Shandong),578(Henan),715(Jiangsu),273(Fujian),308(Hunan),392(Guangdong),108(Yuannan),362(Chongqing),471(Anhui),Municipality population density(includeing suburb area)Shanghai2512Beijing738Tianjin866Chongqing362,over 500 capita per square kilogram,276(Liaoning),866(Tianjin),738(Beijing),209(Shanxi),443(Zhejiang),201(Guangxi),326(Hubei),188(Sanxi),177(Sichuan),400500 capita per square kilogram,300400 capita per square kilogram,200300 capita per square kilogram,100200 capita per square kilogram,less 100 capita per square kilogram,Nirmainterim-rpt,For different region,market segment structure is also different because of various income level and consumption habit,North,West,East,South,Low end market account for over 50%of total market and is especially large in the low developing North and West of ChinaMiddle-end product take a higher share in East and South of ChinaHigh end market is comparatively higher in south market because of its high income level and accptance of concentrate powder,50.9%,56.7%,57.3%,40.9%,45.9%,30.6%,31.8%,39.9%,9.2%,11.5%,12.1%,13.2%,Total,000t,High(10RMB/kg),Middle-end(710RMB/kg),Low-end(7RMB/kg),Resource:AC Nielson retailing audit 1999-2000,Nirmainterim-rpt,East China is in intense competition and major players are all national brands,115.7,Jiangsu,307.5,70.3,224.1,Henan,Zhejiang,Shanghai,Anhui,60.4,Jiangsu and Henan have the largest market volume in east ChinaJiamei,Whitecat,GiGE and Fangcao are traditional brands with strong regional market basesdistribution network is comparatively mature with some large distributors in dominanceQiqiang has successfully penetrate east China and established leadership with strong sales campaignLibai is planing to penetrate east ChinaDiaopai is also making efforts to enlarge its market share by offering high margin incentive to distributors,Total:778,000 tons,Nirmainterim-rpt,In South,we recommend Hunan and Hubei are target market for market entry because Libai almost control the whole low-end market in Guangdong,170,Hunan,190,118,179,Hubei,Jiangxi,Guangdong,Fujian,84,Libai almost control the whole low-end market in GuangdongResun as a regional brand holds half of Hunans low-end marketOne flower and Quanli has 30%and 20%of low-end segment respectively in Hubei,Hunan and Hubei are the target market due to their large market size and weak competitors,Total:745,000 tons,Nirmainterim-rpt,West region can only be Nirmas potential market in the second stage because of its limited market size and strong competitor,77,Sichuan,154,69,102,Guangxi,Yunnan,Shanxi,Guizhou,69,Qiqiang takes 44%of low-end market with three manufacturing sites(Sichuan,Guizhou and Sanxi)P&G take over one major local brand(Nanfeng)in chongdu to expand low-end marketWhitecat has setup a manufacturing site with 80,000 ton capacity in ChongqingLow population density and per capita consumption,West region can only be Nirmas potential market in the second stage,Total:537,000 tons,Chongqin,65,Nirmainterim-rpt,Regional and local brands play the major roles in the Northern market,North 2,28%,22%,3%,North 1,30%,37%,Tiantian,Others,2%,14%,30%,Qiqiang,Yunquan,Mulan,Jiali,Qiqiang,Deer,Jiali,Jianlong,Seagull,Others,Source:by Henkel(Tiantian)and Unilever(Yunquan),Except Qiqiang four local brands are the major players in North 1 and North 2,North1:Liaoning,Jiling,Heilongjiang,458,210,North2:Shandong,Hebei,Shanxi,BeijingTianjing,14%,16%,Nirmainterim-rpt,Shandong and Hebei are suggested as strategic focus in early entry period,68,Shandong,181,41.5,132,Hebei,Shanxi,Tianjing,Beijing,35.6,In Shandong,Deer and Jiali holds 30%and 25%of the low-end market respectively.But weak financial srength and less sophisticated marketing skill undermine their competitivenessIn Hebei the detergent market is highly fragmented with Qiqiang winning less than 20%market share,the rest are insignificant,In Shandong and Hebei a strong and dominant brand is non-existent yet,Total:458,000 tons,Nirmainterim-rpt,Profile of major product form,Spray dry,Dry mix,Agglomera-tion,TideWhitecatQiqiang,ArielWhitcat,OMOGaochao(whitecat),90%,8%,2%,7.9,11.4,18.0,HollowLow densityFoamingHigh water solubility,SolidHigh densityNon-foamingExcellent stain removing efficacy,High fluidityExcellent stain removing efficacy,Well accepted in rural,High price undermines affordability and consumer acceptable,New product,Spray-dry technology dominate the laundry powder industry sector,Source:Roland Berger&Partner interviews,Nirmainterim-rpt,Rural consumer preference,Price and money value are two most important factors influencing rural consumers purchasing decision,FoamingFragrantWater solubilityBig package size(400g,750g),Primarily through grocery in village/townMarket/fair especially weekly market,Effective tool to induce trial during introduction period Using daily necessities as prize is well accepted,Popular acceptable price in rural market:6.0 RMB/kg,Source:Roland Berger&Partners interview,Nirmainterim-rpt,Qiqiangs low price strategy proves to be successful in the low-end segment,Relative price comparison in low end segment(7RMB/KG)Total low end segment=100%,0,1,2,3,4,5,6,7,5.2,5.4,6.0,6.2,6.3,6.4,Tiantian,Resun,Yueyuehong,Fangcao,Seagull,Qiqiang,Quanli,Mianghua,Price(RMB/kg),Volume share,3%,3%,30%,6%,5%,3%,3%,3%,Nirmainterim-rpt,Price is the first decision factor for rural consumer to buy detergent power,PriceStain removing EfficacyFoamingFragranceWater solubilityWhiteningEnzymatic,+0-,Price is the most important factor to affect consumer behavior in rural marketThe consumer also pay considerable attention to the stain removing efficacy of detergent powderThe rural consumer often evaluate the stain removing ability through the foaming effect of the detergent powderMost of the rural consumer also like the fraqrance brought by deterrent powderBecause in general fake product cant solubilized in water,the feature can help consumer distinguish real product with fake productThe rural consumer seldom care for the whitening and enzymatic ability of detergent product,Example:Decision factors of rural consumer,The customer behavior is fit with Nirmas low price strategy,Source:Roland Berger&Partners interview,Nirmainterim-rpt,In order to reduce the transportation cost,Qiqiang set up seven mainfacturing site national wide,Source:Roland Berger&Partners interview,East,South,West,North,Guizhou,Benxi,Sichuan,Neimeng,Shanxi,Anhui,Xian,No manufac-ture site,Example:Qiqiangs manufacturing site vs.Market performance,Qiqiangs headquarter,Nirmainterim-rpt,Focus on one regional market and concentrate the marketing resources at the beginningUsing accumulated experience to expand new market,3 A systematic expansion strategy should be applied,Source:Roland Berger&Partners interview and analysis,Regional penetration,Low price,Front attack,Motivated dealer,Benefited customer,Recommended retail price is about 5.56.0 RMB/kgHigher price in the beginning to build up brand image,Allocating strong sales team to a new market by intensive marketing and promotionDelegate the built up market to a qualified distributor to manage,Development a incentive sales policy to motivate the dealers along the distribution channel,Adopting well-acceptable approach to promote in the rural market,Nirmainterim-rpt,B The target retail price for Nirma should be less than 6 RMB/kg,6.25,Libai,7.1,5.3,6.5,Whitecat,Qiqiang,Nirma,Source:Roland Berger&Partners survey and analysis,Resun2),5.56.0,1)Libais headquater is in Guangzhou and it is mostly produced by Resun in Hunan2)Local brand in Hunan province,6.0RMB(0.72USD)/kg is the most popular accepted price for rural marketThe suggested retail price for Nirma is 5.5 6.0 RMB/kgThe whole selling price is about 80%of retail price,The initial retail price should be higher for setting up brand image,Nirmainterim-rpt,B Qiqiang fast expansion stems from its appropriate marketing strategy and manufacturing strategy,12.6%,Aug.-Sep.97,7.2%,13.2%,8.3%,Dec.-Jan.98,Apr.-May.98,Aug.-Spt.98,Low cost&low price-The salary level in Shanxi is about half of whitecast in Shanghai-raw-material advantage its Na2 So4 has 35%market share in ChinaRetail price:6 RMB/kg-Drreet approach low-level wholsaler-Use strong promotion to push productLocal manuf