A French confectionary company with multiple candy and chocolate brands was considering entering China’s chocolate market. The company manufactures, distributes, and markets chocolate products. Prior to the project, the company had no presence in China.
In 2018, the client was interested in exploring the Chinese confectionery market and was considering making a possible market entry. Therefore client approached Daxue Consulting for advice on whether it should enter the Chinese confectionery market and, if yes, what should the strategy be.
We used market assessment, product offering evaluation, and consumer segmentation while focusing on these three questions:
Once the decision on whether to enter the market is made, the final step would be dedicated to answering the ‘how’ question – the China market entry roadmap. Each of these four steps are elaborated below.
We zoomed in on the market segments related to the client’s products—chocolates. Over the course of 2 weeks, we performed desk research to collect secondary market data including official and industry reports from online and offline sources. For example, we looked at the data from the China Industrial Development Research Network.
We collected metrics such as market size and growth as well as underlying drivers and trends. Viewing the market from a high altitude, China’s per capita chocolate assumption was 0.1kg/year, significantly less than the U.S.’s 4.4kg/year and Japan’s 1.2kg/year. We expected this figure to grow due to its correlation with the promising rise of the demand and integration of chocolate in daily eating habits of some key consumer groups – we especially identified clear momentum on social media for family-sharing occasions. We not only assessed macro trends that impact the entire product category, but also the micro-trends that were pervasive within a given circle of influence. This included assessing areas in which the performance of imported chocolate tended to be strong.
Finally, we also looked at 3 case studies of how similar brands made their entry to China. We assessed their product categories, distribution channels, client acquisition strategies, and performance.
The next step was to collect primary data to understand consumers’ perceptions specific to the new product our client intended on introducing.
We conducted focus groups to collect open qualitative responses from consumers. We selected 2 focus groups for Beijing and 2 for Shanghai. Each focus group comprised of 6 individuals and we ensured that there was a good mix of participants. Our participants’ occupations covered students, employees in foreign companies, employees in public institutions, bankers, housewives, etc. They ate chocolate anywhere from once a month to once a day for different reasons and they all had their favorite chocolate brands. We presented both the client’s and the competitor’s products and asked the participants questions such as
While focus groups gave us the consumers’ opinions, we also conducted market insider interviews to collect opinions from professionals who were knowledgeable of the industry. We interviewed over 10 marketing managers, business development managers, wholesalers, and purchasing managers. This was helpful in understanding how chocolate brands operate in China. For example, what changes did they foresee coming in the distribution structure, how they selected KOLs in social media marketing, what were the key success factors, etc.
By the end of this step, we collected some interesting insights, i.e. the brands for sharing were different from the brands for gifting, how the Chinese pronunciation of the brand name could be perceived, etc. We created a profile (i.e. age, gender, occupation) of the consumers who would most likely respond favorably to our client’s product. We also presented recommendations on product attributes that could improve consumer perceptions of the client’s products based on feedback.
Using the client profile, we designed online surveys to provide the statistical mapping of consumer preferences and the quantitative support for the market entry decision. We collected the responses from 1,200 respondents who are within our target population across numerous provinces. For example, we ensured that 70% of the respondents were women as women tend to consume more chocolate than men in China. Some of the questions asked were
The survey helped us to design the most optimized value proposition to win against direct competition on key attributes (packaging, format/size, flavor, storytelling). This step also provided key quantitative measures (i.e. conversion) that would be helpful for creating the business plan.
Based on the data collected in the previous steps, we sought to understand the required investment in terms of setting up the operations and succeeding in China. We looked at benchmark data related to similar investments. Then based on our expected channels, geographies, and conversions, we came up with a high-level marketing plan that could guide the next steps. This plan aims to:
We modelized the cash flow targets for the next 18 months, detailing a month-by-month roadmap of the marketing actions to be taken by the client. After benchmarking the costs of the recommended marketing strategies, we defined ROI targets for each action in terms of revenue and asset building, such as followers and organic traffic. With an target market defined, a budget on-par with the market, and target ROIs, the client had a clear road map of how to enter and succeed in China’s chocolate market.