Product launch in the baby food market in China
Product launch in the baby food market in China. China is the world’s largest market for infant formula, which is the biggest segment in baby food. It is expected to grow immensely. According to forecasts, the sales value will reach CNY 250 billion by 2020 in comparison to 2015 when it amounted to CNY 122 billion. There are several reasons for the steady growth in this industry. The increasing urbanization and the rise of China’s middle-class, for instance, as well as their changing consumer behavior as a result of busier lifestyles, play a significant role in the decline of breastfeeding. Research has shown, trends lead towards e-commerce, O2O (online-to-offline), and organic food. Also, the opening of the two-child policy in China needs to be taken into consideration. Don’t forget the high demand for imported baby food, which is perceived as healthier and having a better quality, due to issues concerning food safety in China.
Case description: Product launch in the baby food market in China
Daxue Consulting’s client, a well-recognized, international brand operating within the health care industry, aimed to enter the Chinese market by developing and launching a new product. As to understand consumers’ needs and perceptions, as well as market risks and opportunities, the company approached our research team at Daxue Consulting. The task was to perform a comprehensive market research report including a general market overview, competitors’ benchmarking, pricing, packaging, upcoming trends, and demand expectations, as well as an analysis of distribution channels and potential risks. Additionally, our client asked Daxue to perform a naming project.
Phases of the market research
The primary goal was to analyze the future development for the infant formula segment in China as well as to decide on a strong name. According to Clement Mougenot, Head of Research at Daxue Consulting, one of the critical parts of the branding process is naming. “If a brand wants to be serious and intends to build a reliable and comprehensive marketing strategy, naming is one of the key steps for brand building; it is the main component of the positioning strategy,” Mougenot says. Therefore, the market research team of Daxue Consulting created a tailor-made project for the client’s case by performing the following steps:
Phase 1: Desk Research & Competitor Analysis
As a first step, Daxue Consulting executed an extensive desk research. Our market research team gathered general information about the current market situation including demographics, or shifts in consumer preferences. Additionally, Daxue performed a detailed competitors’ benchmarking to compare market shares, their distribution, packaging, and price strategy. Furthermore, the research team of Daxue analyzed our client’s brand positioning using Daxue’s in-depth experience with store-checks to proceed with the following phase.
Phase 2: Preparation of Naming
As a second step, Daxue Consulting’s project managers developed a list of around a thousand keywords and names, which can be connected either to the brands’ sound, the relation to the industry or to the image of the product our client desired to have. After brainstorming, Daxue’s team weighed and ranked the suggestions according to a particular scheme including, for instance, relevance, depth of meaning, distinctiveness, appearance, or sound, considering questions such as:
- Are there any limitations or legal issues to consider?
- Does the term need further explanations?
- Can the names be linguistically verified in several Chinese dialects?
Phase 3: Focus Group & Verification
To be able to answer these questions adequately, the Daxue’s team organized a focus group. Our research team invited, therefore, linguistic experts who can interpret the characters as well as people from different regions for pronunciation reasons to finally be able to select the right names. Our Head of Research, Clement Mougenot, furthermore stated that especially in China, naming is important as there are characters which can have, for instance, different meanings as well as people speaking different dialects in different areas of China which need to be considered when choosing a brand name. Finally, Daxue Consulting also checked whether the names are registered already or available.
Phase 4: Final Report & Recommendations
As for the last step, our market research team provided the final report, which comprised detailed information about the baby food market and its demographics, current and expected demand, consumer habits, the performance of key competitors and their strategies, as well as their success factors and potential risks. Therefore, the client could develop the product according to the needs of its target market. Furthermore, Daxue Consulting included recommendations concerning naming, pricing, distribution channels, and packaging to help the client making informed decisions for a successful product launch.
To know more about the Product Launch in the Baby Food Market in China, please don’t hesitate to contact us.
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