How AB InBev Succeed in Chinese Market - Free Essay Example

Content 1. Introduction 2. Aim and Objectives 3.Literature Review 3.1. Local Competitors 3.2 New Market Strategy 3.3. Market Campaign 3.3.1. Brand Position 3.3.2. Distribution 4. Methodology 4.1. Research Design 4.2. Sampling Type 4.3. Data collection 4.3.1. Primary Data 4.3.2 Secondary Data 4.4 Research Ethics 4.5. Limitation 5.Potential Solution and Recommendations 6.Reference 7.Appendix 7.1..Timetable 7.2. Conceptual Map 7.3. Risk Register 1. Introduction Europe was the major centre of brewing industry in the world. However, it showed a big falls of the beers sales after the mature period of the market (Johnson G, 2005). On the other hand, Chinese market is expected to have a continuous growth with long-term profit prospect , and becomes the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s largest alcoholic beverage market in both volume and outputs terms so far (SAB Miller, 2013). As the leader of world brewing industry, AB InBev noticed this giant potential market and decided to enter into this market campaign. In order to survive in Chinese market, this research will help AB InBev to analyze their local competitors, new strategy and design a market campaign. 2. Aim and Objectives This research is aim to discuss how AB InBev can succeed in the Chinese market campaign. The three main objectives are:  ·Evaluating Chinese local brands from customersà ¢Ã¢â€š ¬Ã¢â€ž ¢ perspective.  ·Creating a new market strategy can be used in the Chinese market.  ·Designing of a market campaign for AB InBev in China. 3. Literature Review 3.1. Local Competitors The Chinese local brewing companies have escalated steadily in production as well as consumption since 1980s (Accenture, 2012). Majority of the Chinese brewing factories are running locally, including some of them was owned by the local government before (China Daily, 2013). There are several big local brands, such as Tsingtao Beer, Yanjing Beer, which are all named after the city names. Because of the strong support from government and the customersà ¢Ã¢â€š ¬Ã¢â€ž ¢ intended local brand choice based on their culture, these big Chinese local brewing companies have already been monopoly locally in some areas(Bernard A, 2012). However, there is still not a national brand which can be operated all over the world (Accenture, 2012). Several local brewing companies do not perform well in network social media. Tsingtao Beer still uses the old method, TV advertisements, to do their promotions. The research shows that Tsingtao Beer spent 83,200,000RMB on the TV advertisement during CCTV Ne ws in one year (Yichao S, 2013). 3.2New Market Strategy Most local brewing factories are relying on the low cost and concentrating in Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s eastern and middle south provinces (IBIS World, 2013). In these provinces, there is a big difference in peopleà ¢Ã¢â€š ¬Ã¢â€ž ¢s consumption behavior between urban and rural areas (Ke Q, 2009). AB InBev must look to a new market strategy based on this market structure, which will be tailored to the unique characteristics of Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s diverse markets (Accenture, 2012). In the research, it shows that urban customers are used to be served through supermarkets, restaurants and bars, which are all well-established sales channels for selling high quality products. Compared with people in urban areas, rural beer drinkers are preferred to keg and draught beer in small stores (Accenture, 2012). In another words, the new market strategy for AB InBev is to serve high-end products for urban customers and low-cost but high-quality products for rural customers. 3.3. Market Campaign In order to execute successfully the new market strategy described above, AB InBev is required to design a market campaign. There are 6 steps for planning a successful market campaign, including setting objectives, defining targets, evaluating competition, setting a budget, considering communication channels, monitoring and measuring (World Press, 2013). In addition to the 6 steps, it is necessary for AB InBev to focus on their brand position and distribution. 3.3.1. Brand Position AB InBev operates a board brand portfolio which includes more than 200 highly popular beer and soft drinks brands all over the world (Anheuser-Busch InBev, 2012). In order to target the market in different segmentations, the company classifies its brands in three levels, which are global brands, international Brands, and local champion brands. 3.3.2. Distribution The Chinese beer companies are highly relying on the two channels provided by regional distributors to access the market, including ready-to-drink channels and non-ready-to-drink channels (Accenture, 2012). However, the direct online distribution is demanded according to the new customersà ¢Ã¢â€š ¬Ã¢â€ž ¢ behavior (Lorin M, 2001). In this way AB InBev can also gather and analysis the customerà ¢Ã¢â€š ¬Ã¢â€ž ¢s data. 4. Methodology 4.1. Research Design This research will be done by using mixed methods research, which combines quantitative and qualitative research (Norman K, 2011). It includes both a questionnaire for customers and an interview for alcoholic beverage sales managers. In order to increase the validity of the research, the questionnaire will be tested cautiously to minimize any misunderstandings (Brain W, 2000). 4.2. Sampling Type The samples of the research study are selected randomly outside of supermarket and clubs, which will increase the data validity (Brain W, 2000). In addition, it will be combined with the snowball sampling to complete the rest of questionnaire. The samples have been divided by regions, ages, genders and different backgrounds. The samples for the interviews are alcoholic beverage sales managers from different supermarkets and bars in Shandong Province, which is the biggest province in east China. 4.3. Data collection 4.3.1. Primary Data The primary data will be collected through questionnaires and interviews. The questionnaires will use multiple choice questions. Each of the interviews will be expected in 20 minutes. All the questions in the interviews are using open answer questions. 4.3.2 Secondary Data Besides the primary data, this research will also use secondary data, which includes textbooks, scholarly articles and electronic database (Ashley B, 2013). The secondary data is used to build the literature review. 4.4 Research Ethics Permissions have been given in writing about the interview details. All the managers and company names will not appear anywhere in the dissertation. 4.5. Limitation Since snowball sampling does not select units for inclusion in the sample based on random selection. In this method, it cannot control the possible sampling errors. 5. Potential Solution and Recommendations AB InBev is expected to succeed in Chinese market through a new market strategy, which will diverse into urban areas and rural areas in China. In addition, the market campaign is required to focus on the brand position and distribution. 6. Reference Gerry ¼Ãƒâ€¦Ã¢â‚¬â„¢J (2005). Exploring Corporate. 7th ed. Harlow: Pearson Education Limited. P108-109. SAB Miller. (2013). SABMiller plc Annual Report 2013. Available: https://www.sabmiller.com/files/reports/ar2013/2013_annual_report.pdf. Last accessed 27th March 2014. Accenture (2012), Chinaà ¢Ã¢â€š ¬Ã¢â€ž ¢s Beer Industry: Breaking the Growth Bottleneck. Available from: https://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-China-Beer-Industry.pdf [Accessed: March 27, 2014]. China Daily (2013), Tsingtao Beer. Available from: https://www.chinadaily.com.cn/regional/2013-08/07/content_16878067.htm [Accessed: March 27, 2014]. Ascher, B. (2012), GLOBAL BEER: THE ROAD TO MONOPOLY. Available from: https://www.bluedustpgh.com/uploads/1/0/3/0/10309574/global_beer_road_to_monopoly.pdf [Accessed: March 27, 2014]. Sun, Y. (2013), CCTV Advertisement . Available from: https://www.chinadaily.com.cn/qiye/2013-11/19/content_17114715.htm [Accessed: March 28, 2014]. IBIS World. (2013),Beer Production in China. Available from: https://www.ibisworld.com/gosample.aspx?cid=86rtid=1 [Accessed: March 27, 2014]. Qin, K. (2009), The Different Consumption Between Rural and Urban Areas in China. Available from: https://www.diva-portal.org/smash/get/diva2:241010/FULLTEXT01 [Accessed: March 27, 2014]. World Press. (2013), Step-by-step ideas for planning a new marketing campaign. Available from: https://cbskesl.files.wordpress.com/2013/11/uk_marketing_guide-1.pdf [Accessed: March 27, 2014]. Ab Inbev, K. (2012), Annual Report 2012. Available from: https://www.sec.gov/Archives/edgar/data/1140467/000119312513078531/d493436dex992.htm [Accessed: March 27, 2014] 7. Appendix 7.1 Timetable 7.2. Conceptual Map 7.3. Risk Register Risk Explanation Likelihood Impact Risk Score Risk Level Reduction of output caused by nature disaster which affect the accuracy of data 4 3 12 Low A new competitor enters into the market campaign, and affects the market balance 7 8 56 High Chinese government launches new policy to limit the sales of alcoholic beverage 8 6 48 High Any scandals of AB InBev is exposed to public 3 7 21 Low Insufficient test of questionnaire 5 7 35 Middle Misunderstandings caused by translation errors during the surveys 5 7 35 Middle The scope of research designed cannot represent the whole Chinese market 8 8 64 High Insufficient resource 4 6 24 Low Computer Break Down 6 6 36 Middle