Beijing Red Star. by Nils Boesel and Sebastian Hornschild 21st of November 2011

Beijing Red Star.by Nils Boesel and

Sebastian Hornschild 21st of November 2011

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Situation Analysis: Company

• Beijing Red Star Company founded in 1979• On of thelargest Liquor Producer in China ( 537

tons of liquor in 2010)• Most commonly Baijiu among Blue-Collar

workers across norther and north-eastern China

• Broad range of different products• On the German Market for almost five years

Situation Analysis: Market Research

• Overall Revenue: > 2 Billion US-$ (ranked 11th in Europe and 45th in the world)

• Average German drinks approx. 8 bottles/year• German Liquor Market dominated by

„Jägermeister“ and „Smirnoff“ Vodka• Herb Liquor with 22% market share first,

followed by clear liquor, rum and vodka HongXing Erguotou categorized as clear liquor

Situation Analysis: Market Research

Liquor

Rum

Vodk

a

Clear liquor

Situation Analysis: Market Characteristic

• Predominantely small family owned liquor producersBerentzen, Turnover: 170 Million US-$Rum 80 (Jagertee), Turnover: 48 Million US-$CONTRARY: Diageo, Turnover: 10 Billion US-$

• Comparatively high liquor tax: 0,7l Rum with 40% alcohol percentage = 3,65 Euro tax (excl. VAT)

• Law restrictions: advertisements addressed to minors are not allowed

Situation Analysis: Customer Insight Search

Most revenue generating customers

Male

person: age

between 40-65

Male and

Female : age

between 20-35

Sources: McKinsey Study on the Liquor Market 2010

China Germany

Conservative Liberal

Traditional Values Liquor for Socializing and Fun

Liquor drinking as a habit of the older aged

Situation Analysis: Customer Insight Search

• In 2007 more than 712 Million Bottles á 0.7 liters have been sold Market penetration of 68%

• Between 2004-2008 choose liquor by price („The cheaper the better“)

• Starting from 2008 a new consumer trend can be identifiedQuality and Brand name is becoming more

important

Sources: McKinsey Study on the Liquor Market 2010

Situation Analysis: Customer Insight Search

• Conduction of an online survey via E-Mail and Social Networks in Germany

• Participants: 213; Valid surveys: 198• Persons that consume liquor on a regular

basis(minimum once a week): 112• Share of people between 18-35 years who

consume liquor on a regular basis: 73%• Most important attributes during purchasing

decision: quality(58%), brand name (19%), price(15%), taste(8%)

• Information sources: TV(45%), magazines(29%), radio(20%), online(6%)

Situation Analysis: Customer Insight Search

Gender

Male Female

Age

18-2526-3526-4545+

Education

Middle-SchoolHigh-SchoolUniversityProfessoral

Age of persons who consume liquor on a regularly basis

18-2526-3536-4545+

Situation Analysis: Customer Insight Search

Important Attributes buying liquor

QualityBrand namePriceTasteNever buy liquor

Information sources

TVNewspapers,MagazinesRadioOnline

Situation Analysis: Customer Insight Search

Important Attributes buying liquor

QualityBrand namePriceTasteNever buy liquor

Information sources

TVNewspapers,MagazinesRadioOnline

Situation Analysis: Key Advertisement Problem

• HongXing Erguotou barely known in the Western Hemisphere, no exception Germany (only 2 respondents out of 198 knew the brand)

• Beijing Redstar tried to enter the European market

Missing Communication and

Advertisement Strategy for German

Market

No consistency and motivation

NO brand awareness and recognition

Code of Conducts for Advertisement of the Liquor Industry!

Situation Analysis: Opportunities

• Most valuable liquor customers: young and middle-aged adults (drink alcohol for socializing and fun) More attracted to brands than the older aged

• In the industry for clear liquor no distinct or dominant producer can be found (in contrast to herbal liquor and Vodka) entrance barriers are comparatively low in this

market

HongXing should communicate its distinct values and cultural background (contrast to competition)

Situation Analysis: SWOT

S

• German Liquor Market value of 2 bn US-$•Quality 1# in the purchasing decision of German liquor consumers • Liberal market

• Consolidation of the Market Large producers(e.g. Diageo) with high market power• Advertising restrictions are becoming stronger

• Unique and exotic product• Successful in China• Good advertising strategy

• Low advertising budget• Very unknown in Germany

W

O T

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Advertising Message Objectives

Communication Goal:• HongXing Erguotou to be the new popular

drink among the young target group on • Focus on building brand awareness • Goal: 10-20% brand awareness after the first

year large media campaigns• Long-term Advertising penetration to achieve

60% brand awareness after the third year

Response Goal:• 20-30% market share in the segment of „clear

liquor“

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Advertising Appropriation

• Hongxing major player on the Chinese market• Still government-owned

First real involvement on an international stage Tendency for Low-risk involvement

Period: • Liquor consumer market not cyclical

campaign can be started at any given time of a year

• Higher spendings at the beginning to get awareness

Advertising Appropriation: Media Channels and Media Strategy

• Self-prescripted code of conduct of the German liquor industry• Assumption: Comparatively small advertisement budget (1.3 mn €)• TV campaigns too expensive• Focus on print ads and billboard-ads

1st year 2nd year 3rd year 4th year0

100

200

300

400

500

600

700

800

Budget Spendings

On-Spot MarketingOnlineBillboards and Print Ads

in $

100

Brand Awareness

Recognition

1st Year 20% 10%2nd Year 35% 20%3rd Year 50% 30%4th Year 60% 40%

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Creative Strategy

High Quality, Unique Taste, Exotic Origin

China

Double Distilled

Sorghum

Fit with the young and middle aged target consumers!!!

• Focus on the distinct, unique and outstanding attributes

Creative Strategy: Message

• HongXing liquor wants to exceed the consumer expectation

• Stronger, Greater, Taller, Better are often terms to describe the Chinese emerging market (link to the liquor‘s origin)

Both elements as part of the messages

Creative Strategy: Message

Creative Strategy: Message

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Evaluation StrategyVI.Conclusion

Evaluation Strategy

• Pretest: Qualitative and Quantitative interviews of people that belong to our target group

• Research on the German Test Market Hassloh• Surveillance Tests: Different households in

different regions will be tested on their brand awareness

• Post-test: evaluating the effectiveness of the campaign results for the product launch in other European countries

Agenda

I. Situation AnalysisII. Advertising Message ObjectivesIII. Advertising AppropriationIV. Creative StrategyV. Media StrategyVI.Conclusion

Conclusion

High QualityUnique TasteExotic Origin

= Beijing Redstar.

Exceeds your expectations!

Thank you!