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Secret recipe in china a case study marketing essay

Secret Recipe is the top restaurant and bakery cafe in Malaysia. The demand is growing day by day worldwide Secret Recipe serves super class home-made cake and pastries.

Western cultures are more preferable to Chinas new generation. Secret Recipe can build a very high-quality market in china based on this generation. Secret Recipe should be alert of some points when they plan for strategy. The company should emphasize on consumer behavior otherwise there is a huge chance to being neglected in china. Secret recipe mast consider Chinese cultural issues if Secret Recipe want success in the market. China has successful GDP growth in recent days. as the china’s people’s salary is increasing so that they may go at Secret Recipe. Other non-cultural issues contain demographics, geographic, and the service design of the Secret Recipe outlets in China. These factors propose huge business opportunities. There is some hostile issues may attack like virus outbreaks,. In china’s great economical growth, there will always be a higher demand for products than there is supply. food ingredients, which may contain some banned chemicals. Secret Recipe mast be watchful about their food supply. In order to succeed in penetrating the Chinese market, the various cultural and economic factors must be taken into account seriously to try and cater for the whole market while avoiding offense to any parties.

INTRODUCTION

The success of the establishment will make the foundation for secret recipe in the Chinese Market. In Beijing and Shanghai, Secret Recipe already established two of their outlet secret recipe may expand their outlets based on china’s higher growth rate and attractive market.

For the spreading out of secret recipe, this report will provide a clearer picture of the target country, China, which can help Secret Recipe, the reason behind this report is to understand the china market for secret recipe

3. 0 FINDINGS & DISCUSSION

Product & Country

China is the world’s most populous country with 1. 3 billion people. Because of its huge population, they have high rate of food demand. Because it is one of the main basics to survive.

food consumption growth in China and China will become one of the fastest The rise of China’s food consumption is significantly good economic prospect and will impact on the world food demand. China’s total spending on food and beverage has significantly increased. This has given Secret Recipe a good prospect of business opportunities in choosing China as the target country to invest in.

Since China began opening its economy up to the world after the late1970s, a large number of overseas firms have begun investing in this country, which has a rich ancient history (Miller 2004). Secret Recipe has chosen franchising as the market entry strategy. Franchising is defined as ” when a retailer (franchisee) agrees to make some payment and meet the operating requirements of a manufacturer (franchisor), in exchange for the right to market the franchisor’s goods or services under its brand name” (Boone & Kurtz 1998). Beijing, as China’s capital city, is the country’s political, cultural and international exchange center. Shanghai, as the largest city, is also the most prosperous city in terms of Gross Domestic Product (GDP) in China. Both Beijing and Shanghai are autonomous municipalities in China, and as such they enjoy the similar economic and administrative autonomy as a province (Market Profiles on Chinese Cities and Provinces – Beijing, 2005).

Targeted Market

Secret recipe targeted the working class people and teenagers. It chooses the working class people because of high income among the people of those targeted cities. Chinas younger generation is influenced by western culture so secret recipe uses this as a advantage. Prices, distribution channels, and promotion can be used to to crack through the target markets efficiently.

Culture

Culture is considered vital for marketing because it reflects perceptions, social interactions. Culture influences affect the buyers’ decision on the product. However, Secret Recipe needs to understand the Chinese culture in driving the consumer’s behavior and perceptions. The younger generation may slightly moving towards western but the tradition they have to follow.

Language

Language is the key to enter a country’s culture. It plays a vital role in international marketing communications. China has many diverse cultural groups which communicate in their own respective tongue, but yet most of the chinese people understand one common language, which is mandarin. Language important as marketing communication tool in advertising, promotion, public relations, and business negotiations.

Attitudes and Values

The Chinese are more friendly, therefore, word-of-mouth becomes critical because they are able to influence one another in being favorable to a brand. Chinese are very concern about the brand so new entrants in the market must compete with giant competitors. For Australians and Europeans, individualism is their value. Person’s self-fulfillment and realization of individual prospective are genuine. This view contradicts strictly with most of the Chinese’s views which are wedged in traditional veiw. Establishing this secret recipe, it uses Malaysian artist who is already famous among the Chinese. It is important because it helps only not to promote the product but also educate customer about its quality.

Relationship progress

Chinese has a unique culture which has no common with western or another culture. Business cultures of the Chinese are vastly different from Western due to Confucius teaching. Secret Recipe could start the process of establishing good relationship with networks of suppliers, retailers, banks, and local government officials. By getting the right relationship always minimize the risks, frustrations, and disappointments when doing business in China. On the hand respect and self-esteem is an essential component for the Chinese business awareness. They are very much related with this two component which they call ‘ganauxi'(relationship) ‘Mianxi'(self-esteem and respect).

Product adjustment

China is a huge country and it has different cultures with various needs in different parts of the country. In the opening, Secret Recipe can focus only on counting noodle dishes in its menu. Noodles are considered the most popular food amongst Chinese cause they think ‘long noodles’ to provide them a ‘long life’. Some strange details must follow:

– Prohibited to use knives

– Menu should be designed for family size

– Chopsticks must be provided

– Include meats in the dishes specially ‘pork’

– Chinese tea is preferred in every meal

Beside this served plate should be cleared before the next course of meal. So secret recipe they also launched Chinese tea as a new menu in thei list. They followed almost every rule of their cultural conviction.

Subculture

Subculture is something inside a culture, it is a group within the culture with different sets of behaviors and beliefs that make them a part of a larger culture. It may be distinguished by the race, age, class, gender, ethnicity or aesthetic, religious, occupational, political. China officially recognizes 56 distinct tribal groups. The largest group among them are Han Chinese, which is about 91. 9% of the total population. The majority non-religious people constitute about 59% of the population.

However, Buddhists are not allowed to consume beef whereas Muslims are prohibited from consuming pork. So, it has to produce food for the Muslims as well as for the Buddhist. It focuses to all of the customer for better reputation for itself, which also can gain a competitive advantage in the market.

Economic aspects

Since the late 1980’s, China brought change and reformed is economy to be an open economy system. Therefore, it was possible for them to bring an outstanding achievement and transformation from a conceptual economy to turn into a market oriented economy (MOE). Since then China started experiencing its prevalent decline of poverty and on the other hand, its mentionable increase in their revenue stages in the eye of the growth of World Economy. (According to-China Country Review 2006).

Basically, the GDP growth rate is the growth of a country’s economic situation after considering the inflation outcome of the particular country. The actual rate of GDP in China was at least 8% in 2000. On the other hand, the at most actual GDP growth rate of 9. 3% was reached by China in 2004. It is considered as an indication that China is turning to be richer than ever before, which is mentioned in China Country Review- 2006. So that, these statistics come to the thought of the management of Secret Recipe that they can invest in specific places like Shanghai and Beijing as they are self-directed metropolises with the highest growth rate of GDP.

In reality, the GDP rate of China got arisen with an average rate of 8. 5% from the year 2000 to 2004. The rapid growth in their GDP brought a higher disposable income rate that provides a higher spending power among the people of China. If investors from various countries continue investing in China, it is highly anticipated that the economy will keep continuing to enjoy future economy growth which is a major reason for Secret Recipe to generate their manufactured goods in order to benefit from the rising spending trend in China.

China became the World Trade Organization (WTO) on the 10th of November in 2001. The admittance to WTO is considered to bring prompt benefits to China. Furthermore, long-term improvement on GDP growth will be the result of an effective limitation of the national economy which will profit China’s long-lasting economic growth visions according to China Country Overview-2005. Secret Recipe is expecting to ensure the profits of an endless GDP growth as higher GDP growth adds to higher disposable income for higher living standards.

Other Issues

Demographic segmentation

The first concern that needs to be considered is demographic segmentation. Demography is defined as ” the study of human population in terms of size, density, location, age, sex and others” (Resource-Kotler et al. 2004). Demographic segmentations are crucial for Secret Recipe to control its potential target market. It must be considered to target the teenagers aged from 0 to 14 years old which is 21. 4% of China’s whole population (REFERENCE-World Fact Book 2005). According to this information, Secret Recipe will be able to concentrate more on the wants and likings of its target market.

Geographic segmentation

Geographic segmentation describes the separation of market into various geographical components which defines provinces or foremost cities for international marketing. Since the majority of targeted customers fall in the medium and higher income classes and who are willing to spend their income rather than the basic needs only, Secret Recipe outlets will be opened in metropolitan areas which targets mostly Beijing and Shanghai at the beginning. This is merely for the reason that the average revenue levels in the main and large cities are higher compared to the smaller ones. Secret Recipe outlets are also subjective by the infrastructural and transportation convenience in the particular areas of the market. Finally, individuals living in Beijing and Shanghai are more likely to spend their earnings and willingly to enjoy a better life and also to fulfill their desire by having meals at a sophisticated place to maintain the level of luxury with upper class individuals.

Design of the Outlet

After designing the target market of Secret Recipe and its prospective consumer’s segmentation, Secret Recipe needs to place its products and services to fulfill the consumers’ needs. Since, Secret Recipe targets the independent adults’ means who are working and teenagers. Besides, the interior design of all their outlets needs to have the luxury. On the other hand, it must be well-designed to provide the customers with modern facilities. The comfortable and stylish design of the outlets will provide fruitful result to the customers to think that they are dining in a place where they can find the great desire of luxury which satisfies them with their self-esteem as well. It’s an obligation to Secret Recipe that the openings must have the cleanliness and make sure that the place is hygienic. Meanwhile, the openings are going to be placed in rich cities in China. The supervisors working in Secret Recipe outlets must be trained with severe training to make sure that they are polite to the customers. Since, all the customers have a preference in dining in a place polite waiters and waitress.

S. W. O. T ANALYSIS

STRENGTH

1. Brand

Secret Recipe has strong term on brand building earlier on by building friendly and easy to remembered logo, corporate color, marketing strategies, uniforms, and menu layout. However, the internal design of brand is made very cautiously that cannot be copied by the competitors. Their brand has got strength and value in the market which they have attracted more investors and customers.

2. Product

The product which made by Secret Recipe in china are in high quality and standard. Furthermore, they can monitor the quality of their product at their restaurant as well as product plant. The products which Secret Recipe produced are homemade cakes, baked desserts, beverages, fusion foods and many others.

3. Marketing

The competitive advantage that they have is the economies of scale that they can reduce their cost and improve the quality of their product. They have different strategies in their marketing plan in which they use advertising and marketing through internet, brochures, catalogues, flyers, newspapers and television advertisement and many others. They are customer oriented that they make cakes and menus during special occasion such as Valentine’s Day, Mother’s Day and others.

4. Franchised System

They are enabled to access the date form the headquarters using Franchise. All the tailored operational systems, purchasing systems, storing, products, service s standards, marketing and many others have brought ease of operations for Secret Recipe and minimize the drawbacks.

WEAKNESS

1. Price

In their pricing policy they consider price differentiation in which they put different prices for middle income and higher income customers. Since, that the lower income customers cannot afford their products the level of customers is less and as a result they generate less revenue.

2. Staff

The company experience turnover as is usual in the industry. Therefore, one of the reasons that the company incurs more cost is the turnover rate and the hiring of new employees and training them.

3. Language Barrier

The employees at Secret Recipe are lacked with the communication skills especially English. This problem creates inefficiency in the process of the company. As in international business the product is produced for all people internationally, so , the lack of understanding the customers is a big issue. Therefore, in order for the company to increase it’s customers, it should train it’s employees the necessary skills needed.

OPPORTUNITIES

1. Due to high and increasing demand from the customers the company has the opportunity to expand their business that means they can open another branch of the same brand. It will be helpful for them to serve more efficiently and effectively. It also increases their profit as well.

2. As we mentioned above the company has the opportunity to serve larger market and increase their profit they can try new things and pamper themselves with small affordable luxuries. Thus they can increase the number of their menu that means product line. So that will helpful for increasing their productivity and obviously profit as well.

THREAT

1. A lot of new hotels are increasing in the tourism industry in china. They offered their own bakery and pastries. It is one of the big threats for the company as the number of the competitors is increasing day by day.

Dangerous Issues

Diseases

In recent years some diseases like Avian Flu which has caused many people to avoid taking poultry. This kind of flu are outbreak in some parts of the Europe as well as asia as the consumers are afraid to eat poultry fearing that that they may be infected by this kind of flues. So to overcome this problem the company should increase their alternatives so that they can keep their existing and potential consumers.

Usage of Banned Chemicals in Food

The economy of china is growing very rapidly and will soon resulting in a higher demand for needs than there is supply. So, there may be some scheming manufacturers who will use this opportunity to incorporate some illegal chemicals in their products. Thus the banned chemicals are hazardous and may cause death to the consumers. Statistics shows that in 2001, 146 people were reported dead and over 15000 were hospitalized due to the chemical used in the food industry (Li2004). And another common problem whereby the manufacturer will sell some of the food under the name of a popular brand but is actually copy version of it.

Suggestion and Recommendation:

The company should pay extra precaution on the supplies of food ingredients delivered so as to ensure that the goods they ordered are indeed approved by the government’s health regulations. They should increase their product line. Segmenting their customers they can bring efficiency. Proper promotional activities should be handling out as it is newly entered in the china market. Hey can target their customers to make them loyal consumers. They should give proper facilities to their potential customers.

Conclusion

In conclusion, there is a very possibility for this company to become successful in china. Now China’s economy is currently expanding rapidly and will furthermore be boosted. So since China’s market is still on the verge of robust economic boom. Secret Recipe will not stand to lose from investing in China, and will reap long-term profits. However, though attractive the market may seem, it must be noted that the Chinese are very culturally sensitive so Secret Recipe must take into accounts of all aspects of the Chinese culture and society seriously before proceeding with business. Any success at all for Secret Recipe in China will very much depend on these cultural factors. So the company should give importance to the cultural factors of china.

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