Vitasoy International Holding Ltd.
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Introduction
In this essay, Vitasoy International Holding Ltd. (Vitasoy intl.) was chosen to be a company which will enter a new market with “Vitasoy”. Vitasoy International Holding Ltd. is mainly divided into two major brands which are “Vitasoy” and “Vita”. “Vitasoy” include soy drink and tofu while “Vita” is consisting of different juice and teas. “Vitasoy”, is the original soya bean drink which would be mainly introduced in South Korea. Vitasoy would plan to enter South Korea where the company has not dabbled in.
Background information
In 1940s, Vitasoy was established in Hong Kong and “Vitasoy” soy drink was launched. It was the first use of Tetra Brik Aseptic packaging. There are two major flavors “Vitasoy” which are soya bean milk and malted soya bean milk. Vitasoy intl. has introduced some new flavors of soya bean milk for time to time such as papaya flavor, mocha flavor and orange chocolate flavor etc. The production plants of Vitasoy intl. was throughout the world where is mainland China, Hong Kong, Singapore, the US and Australia. The Boston Consulting Group (BCG) Matrix is used to distinguish the company’s current position of strategy and its products and position relative to the competitors (Doole, 2012). It is used to concern the maintenance of the product. “Vitasoy” is considered as cash cow which has high market share and low growth market of the business. “Vitasoy” usually generate high income to the company and its product life cycle is mature and stable. Porter’s generic strategies would define the company whether a narrow or broad focus and either has one of differentiation or a cost focused strategy. “Vitasoy” is differentiation which is doing something different to make the broad customers willing to pay more for the soya bean milk.
Therefore, “Vitasoy” need to discover a new market in order to extend the product life cycle. South Korea would be the suitable place for the entering.
Internal analysis
Before entering a new market, we need to analysis the market environment of the new market. First, the marketing assets are about the development of marketing strategy (Drummond, 2003). When we are taking about the image and reputation of the company, it refers to the company and the recognition of its corporate identity. “Vitasoy” is a historic brand which has been established 70 years in Hong Kong. Most of the Hong Kong people are familiar with it. “Vitasoy” has a positive image which is warm, joyful and sharing. The country of origin is what particular attributes the consumers will associate with the different countries. These attributes would associate with a brand that derives from that particular state. There is an area of 34,000 square meters Vitasoy factory in Hong Kong. All “Vitasoy” have been awarded ISO accreditation which is a testament in order to commit the quality continually. Hong Kong is associated with high quality and efficiency. “Vitasoy” would be benefit from this perception of the country of origin. The quality positioning is reinforced in the market.
On the other hand, there is a wage distribution network of “Vitasoy”. Not only geographically spread the size of distribution network but also the intensity of product’s coverage on the ground. It is also to develop a strong presence in particular area and locally dominate. When the distribution of the product is fit for purpose, it is regarded as high quality. “Vitasoy” is distributed in many channels in Hong Kong, including supermarket, convenience store and vending machine. Furthermore, the corporate culture of Vitasoy is favorable. The important competence refers to the ability to create and maintain an innovative culture. For example, Vitasoy has unified the image of “Vitasoy” while emphasizes the unique functional benefits of the “Vitasoy”. It aims to increase the brand awareness in China. Vitasoy Intl. Ltd is a listed company.
External analysis
A company is needed to understand the PESTLE forces before entering a new market. The political ideology of Korea is capitalism. In 2012, South Korea was Hong Kong’s 6th trading partner while the bilateral trade reached HK$212 billion (Audrey, 2013). When Hong Kong signed CDTAs whit the major trading and investment partners, the incidence of double taxation can be minimize and reduce the tax burdens on individuals and enterprises. In addition, the political environment of South Korea is stable so it is attractive for Vitasoy to enter. The economic environment of South Korea is promising. Discussing the economic environment of South Korea, it was an incredible growth over the past four decades. South Korea has become a high-tech industrialized economy. The GDP was ranking 13th in 2012. The higher GDP, the more purchasing power South Korean has. The disposable income increases. Therefore, they would be more willing to spend money. Beside, favorable manufacturing base and infrastructure would benefit Vitasoy when they enter South Korea market. The inflation rate was 2.2% which is lower than Hong Kong. Low inflation means the lower nominal interest rate so that the cost of borrowing is reduced. Vitasoy would be encouraged to invest in order to improve productivity. Therefore, it can be more competitive and prosper without steadily having to raise prices. Besides, the unemployment rate of South Korea is 3.8%.
Moreover, the society of the South Korea must be studied and analyzed in order to identify the major features. For example, the population features include the age profiles, class hierarchies, level of health and education etc. There was thousands of years of history of Korean food, Korean usually consider food as medicine for the treatment. They pay much attention to their health. If there mention a product which is good for health on TV or newspaper, that product would become hot. This is a unique phenomenon in South Korea. “Vitasoy” is a health drink which provides low Saturated fat, no cholesterol and high-quality protein in accordance with the pursuance of healthy life style. Besides, convenience stores like G25, 7-11 are popular in Korea. Many types of drinks are supplied in the store. Furthermore, culture involves the shared behaviors, values and beliefs of the society that are learned by different generation. These will be reinforced though education, legal systems and norms. The logo and the packaging of “Vitasoy” are consisted of Chinese wording. The company might need to transform the performance of the logo and packaging in order to cooperate with the Korean style. In addition, Korean culture is highly influenced by K-pop. The idols would affect their purchasing behavior. Besides,