Marketing Hero in China - Mengniu

1. Marketing Hero in China - Mengniu Group Shenyang: Fung 1072373 Jeff 1051800 Eric 1172551 Olivia 1124839 Lan 1083401

2. Founded in 1999 Based in Inner Mongolia CEO – Mr. Niu Gensheng worked at Yili for 17 years and brought experienced management team with him from Yili 23 production bases Annual production – 5.5million tons Background of Mengniu

3. Background of Mengniu • Leading dairy product manufacturer in China • extraordinary growth andexpansion in 8 years time (from no.1,116 to no.1 in the market) • 35% of liquid milk market share (2007) • Competes with Yili and Bright Dairy & Food. The three companies controlled approximately 60% of the market • http://www.youtube.com/watch?v=4r85CytIT1Q

4. Strategies of Mengniu • Strengthening the market share • Exploring and developing new markets • Strengthening raw milk supply base • Developing effective secondary brand names • Developing a comprehensive portfolio of dairy products • Expanding production capacity • Continuing to strive for employee and management excellence

5. Products of Mengniu Ultra-high-temperature (UHT) Milk Milk Beverages

6. Products of Mengniu Yogurt Ice cream Other Dairy Products

7. CompetitiveStrengths of Mengniu • Steady supply chain • International production system • Continuously emphasizing R&D initiatives • Government program that promotes consumption of dairy products for their health and nutritional benefits

8. Discussion Time (5mins) 1) How did Mengniu manage to establish a good brand image among Chinese consumers? Or what initiatives in marketing (promotions and public relations) has Mengniu taken to promote its brands and products? 2) Which one is a better approach to managing products and growing your business in China, diversification strategy or a focused strategy? How about brand or product extensions?

9. Question 1 • How did Mengniu manage to establish a good brand image among Chinese consumers? Or what initiatives in marketing (promotions and public relations) has Mengniu taken to promote its brands and products?

10. Analysis for Q1 • 4P Analysis

11. product • Golden brand name: eg. ‘Pure’ milk — 純牛奶 ‘Good morning’ milk — 早餐牛奶 ‘Good night’ milk — 晚上好牛奶 ‘Whatever’ ice cream — 隨便冰淇淋

16. product • Differentiation: Flavor Type Size build greater loyalty and repeat purchasing by considering customer needs and wants

20. price • Discount price= company expected price • More sales promotion Attract customers

21. place • Supermarket： package besides single product Convenient to household Expand the purchasing amount

23. promotion • Cooperator/supplier : SHEN ZHOU V Spacecraft NBA BOAO Forum for Asia • Fashion creator :Super girl • Fashion follower: famous spokesman • Charity:rural school Bringhigher brand value

24. Chinese astronaut special-purpose milk

25. the only NBA designated milk supplier

26. Official Cooperator of BFA

27. Fashion creator Super girl • A big competition among girls. • The champion can obtain a contract to be a new star.

28. Fashion follower

29. Charity in rural school

30. Question 2 • Which one is a better approach to managing products and growing your business in China, diversification strategy or a focused strategy? How about brand or product extensions?

31. Competitor • Most competitive brand: • “Yili” “light” • Foreign brand has withdrew from Mainland market: • Danone ( France) • Parmalat (Italy)

32. Definition of Diversification • Diversification is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets.

33. New Markets and Products • Exploring and developing new markets for our products • Developing effective secondary brand names

34. Market Old market: Beijing, Shanghai, Shandong, Heilongjiang, Jiangsu and Guangdong. New mainland market: Center China, southwest of China and northwest of China. New overseas market: South Asia, Russia, Japan and Korea.

35. Definition of Brand extension • Brand extension is using the leverage of a well known brand name in one category to launch a new product in a different category • It is a new product.It should use a well known brand.The brand should have leverage with customers of the new category.

36. Extension or not? • Advantage : • Expedite the position of new products • Reduce the risk and the cost to enter market risk: customer can understand, accept and trust or not………. cost: to build a logo, to package, to promote…… • Strengthen the core brand

37. Extension or not? • Disadvantage: • Implication phenomenon Example: “Parker pen” • Trade-off relationship • Desalt characteristic of core product

38. Parker’s fault • Park is a top grade produce, it is a symbol of status. People buy Park not only to write, but to show their status. But, in 1982,the new manager made a wrong decision, Park started to contest low grade market. It impaired the Park’s image as “the king of pens”. Two years later, Park still cannot enter the low grade market, what was worse, Park lose much of the top grade market shares.

39. Choose the right opportunity to extend • Extension product have much similarity with the core brand • Product extension is ineluctable when all the competitors have done it. • Costumers need more choices

40. Discussion Time (5mins) 3)What are the advantages and disadvantages for domestic brands vs. foreign brands? 4) Given the mounting competition and increasing number of brands, how to position and build a brand in China to grow your business?

41. Question 3 What are the advantages and disadvantages for domestic brands vs. foreign brands?

42. There are mainly two types of Chinese companies • State-owned enterprise: • (E.g. SINOPEC, Bank of China, China Mobile) • Non-State enterprise: • E.g.联想(Lenovo) 李寧(Li Ning),吉利汽車(Geely Automobile Holdings Limited)

43. Advantages of domestic brands: • -Monopoly (state-owned company) • Foreign companies are difficult to enter the market that domestic company monopoly in those industries. • (E.g. Banking, telecommunication)

44. -Government support (state-owned company) To build a good relationship with the local government is essential in China. It affects whether the company can operate smoothly

45. -Familiar with local culture and business environment (state-owned and non-state company) Local companies are familiar with what Chinese customers’ Behavior

46. -Lower production cost (state-owned & non-state company) Cheap labor cost enables products to sell at a lower price than foreign products

47. Disadvantage of domestic brands: -Bad reputation (state-owned & non-state company) Chinese milk scandaldamaged the reputation of China's food exports.

48. -Low quality product (non-state company) Local companies lacks of skills in controlling merchandising, production process and product control

49. -Lack of social responsibility (state-owned & non-state company) Entrepreneurs in China are much profit-oriented, product safety are less concerned.

50. -Lack of financial management (non-state company) Increasing price of factors of production causes bankruptcy of many companies