OLD TOWN WHITE COFFEE: INTERNATIONAL STRATEGY

GROUP MEMBERS: NOOR ASILAH NORDIN LINDA NASARUDDIN SIA NOOR ASIKIN AB RAHMAN NUR AMALINA MAT JUSOH MOHAMED ARIFF ABDUL RAHMAN
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PRESENTATION OUTLINE
ISSUES

ANALYSIS

ACTION PLAN

STRATEGIES

CONCLUSION

ISSUES:
To expand the business into the International REASONS: In Malaysia, Old Town White Coffee already have 171 outlets of its caf chain in less than 7 years. Old Town White Coffee already expand their market into neighbors countries such as Singapore and Indonesia. Future project to target market in China and Iran.
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Old Town White Coffee market in Malaysia is expect that the caf chain operation to hit saturation at some point, probably beyond the next three years. With 58.5% of its Malaysian branches crowded around the Klang Valley, market saturation is inevitably setting in. For the last two years, average incremental store sales growth has dropped to single digits reflecting the diminishing new customer pool OldTown has to tap on.
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Sources: MayBank IB Research

All the stores of OLDTOWN White Coffee were located at high traffic, high visible locations in each Asia market. That the market entry strategies have found to be used by OLDTOWN White Coffee in managing their foreign franchisees when expanding into Asia include master franchising and company owned-stores. The marketing approach is essential to gain a competitive advantage for OLDTOWN White Coffee in the foreign market. The construct included market entry, site location, and market positioning. The reason for OLDTOWN White Coffee to choose master franchise as its form of franchising is because of that the master franchising was the most popular mode of entry into distant and cultural dissimilar market such as Asia. 6

INTERNATIONAL EXPANSION WHERE TO EXPAND???

WELCOME TO INDIA

WHY INDIA?????

Coffee Industry
One of the largest coffee producer countries in the world. There are over 170,000 coffee farms in India, cultivating nearly 900,000 acres of coffee trees, employing about 600,000 Indian, and exporting over 500,000 pounds of coffee in each year. Most of the coffee in India is grown in three states: Karnataka, Kerala, and Tamilnadu. Organic coffee production in India. Common species of coffee in India Robusta and Arabica

WHY INDIA?????

Coffee Industry Currently, more than 1,400 coffee shop retail outlets are registered in India, the largest coffee chain belong to homegrown giant Caf Coffee Day. Indias demand for coffee grows, the market is likely to expand and easily add another 5,000 cafs within the next five years.
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PRODUCTION OF COFFEE IN MAJOR STATES/DISTRICTS OF INDIA COFFEE CONSUMPTION IN INDIA (DOMESTIC)

Sources: Retrieved from www.indiacoffee.org

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WHY INDIA?????

Population
The seventh-largest country in the world and the second-most populous country with over 1.18 billion people (around 17.31% of the worlds population) Expected to have population more than 1.6 billion by 2030 and might surpass the population of China.

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WHY INDIA?????

Consumer
Indias young are becoming world-class consumers and they are wealthy and are willing to spend on everything. The changing Indian economy, Indian attitudes towards money are also changing. The Indian consumers today, inspired by job opportunities, have switched to spend more compare to previous. Growing disposable income in India OTWC menu in India must cater to the Indian taste, mixing traditional menu items with those that a customized for the Indian tastes.

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CONSUMER ATTITUDES TOWARDS COFFEE DRINKING IN INDIA

Sources: Retrieved from www.indiacoffee.org

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CONSUMER ATTITUDES TOWARDS COFFEE DRINKING IN INDIA

Sources: Retrieved from www.indiacoffee.org

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CONSUMER PREFERENCES SURVEY

Sources: Comparative Study of Coffee Market in India

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WHY INDIA?????

Political
India is a Sovereign, Secular, and Democratic Republic with a Parliamentary form of Government and also the world's largest democracy country. Improving the investment climate, cutting red tape, a comprehensive WTO strategy, reform in agriculture and small scale industry, and better corporate governance. Offer foreign investors a transparent environment that guarantees the security of their long-term investments.

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WHY INDIA?????

Legal
As stated in Companies Act 1956, the most commonly business organization used by foreign investors in India is the locally incorporated company because other forms such as sole proprietorships and partnerships are essentially impossible under the Indian law. Import duties are applied to almost all goods entering India. Tariffs systems are in the 40% to 60% range for basic raw materials, 60% to 100% for semi-processed goods, and 100% and above on finished and consumer goods.

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WHY INDIA?????

Competition
Market is highly competitive with a large number of Indian and foreign players. Growing trend of consumption of different varieties of coffee and increasing brand consciousness has led to the increase of global player footprints. As market estimates predict at least 100 million new coffee drinkers are to emerge in India in the near future, the potential for more international and domestic entry into the industry is high. Major coffee cafe players : Caf Coffee Day, and Barista

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TOP INDIAN PLAYERS IN COFFEE INDUSTRY

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WHY INDIA?????

Location
Proposed location would be Mumbai (13,900,000) and New Delhi (12,100,000). Home to many call centers where these younger spenders work, many colleges and Universities are also located here which will allow OTWC to target the young generations. Furthermore, these two cities are also major hot spots for tourists, who recognize a multinational brand such as OTWC.
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WHY INDIA?????

Cost
OTWC could reduce the transportation and importing cost of coffee beans. OTWC could also integrate with the local producer to produce its own healthy and unique aroma of organic coffee bean to serve Indian households and to become low-cost leadership.

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ENTRY MODES

INTERNATIONAL STRATEGY

MARKETING STRATEGIES

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INTERNATIONAL STRATEGY

The International Strategy for OTWC is MULTIDOMESTIC REASON:

Food

Local Needs
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ENTRY MODE
ENTRY MODE

OTWC should start-up its business in India by using:

Foreign Direct Investment (FDI)

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SUGGESTION: Open a Roasting Plant and Coffee Shop

A

small scale Roasting Plant will be set up in India - Teams have the responsibility in the daily production and distribution operations.
Production team will produce the coffee
Distribution team will manage the inventory Distribution team also manage the distribution of products and equipments to the retail location

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OLD TOWN WHITE COFFEE (INDIA)

Roasting Plant

Coffee Shop

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ADVANTAGES OF FDI TO OTWC

1.

Cost Advantages: Take advantage of certain resources which may be available in abundance in another geography or location for a much cheaper. Ability to tap the potential of a cheap and skilled labour The MNCs can utilize the host country's natural resources and harvest such resources efficiently and manage to keep their costs low and thus increase their 28 price competency.

Advantages (Cont)
2. New Markets: FDI provides foreign investors with access to new markets as these foreign investors can produce and markets their products and services in the domestic market of these hosts' countries. 3. International Relations: International relations between countries tend to improve when there exists a good amount of trade and investment flow which can be of strategic importance to the home 29 country.

Advantages (Cont):
4. Exposure to other countries: Exposure can also be attributed to the fact that as the number of countries the company operates in, that much more it becomes diversified, so diversification leads to the company having minimized its operational risks For example: MNC operates in 20 countries During the course of the financial year due to some regionspecific risk, 4 countries suffer heavy losses Company will not suffer Profits from the other 16 countries may more than offset the losses from these 4 countries Diversification helps protect the interests of the shareholders of the foreign investing entity.

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MARKETING STRATEGIES
Product

Place

Marketing Strategies

Pricing

Promotion

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PRODUCT STRATEGY

Customize the menu to meet tastes and preferences of Indians.

Tea-drinking population addition more tea beverages. More cream in the coffee. Spices in the tea and coffee, especially ginger and black clove. Favourite fruit flavours in Mango (Indias national fruits).
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PRODUCT STRATEGY

Packaging
Packaging colour green,yellow,brown colourful spirit of Indians.

Branding
Brand logo will be remained as same as Malaysia outlets.

Raw Materials
Coffee beans and tea will be bought from local Indian farmers support local agriculture economy, save money in transportation and tariffs and gain tax benefits.
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PRICING STRATEGY

Skimming Pricing
Early stage. Gain necessary cash flow.

Competitive Pricing
Implemented for the success of venture. Gain competitive advantage & market shares.

Promotional Pricing
Temporary price reduction. Build patronage & store traffic. Stimulate consumer demand.

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PRICING STRATEGY

Cost of production
Start-up price RM3.70 /Rs 55 per drink Concept of zone pricing to make the coffee affordable to the target audience. Promotional pricing
OTWC prices will be 20% lower than local competitors such as Barrista Coffee Company.

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PROMOTION STRATEGY

Promotion strategy is set up to attract the customer intention toward product and persuade a quick purchase of the product in order to gain a short term profit or encourage the brand switching for the customers. The promotion for the OLDTOWN must be very focused on the markets. For example:

Billboard

advertising - should be located at highly traffic areas to increase customers awareness and further leading Indian consumers to the store 36 36 locations.

PROMOTION STRATEGY
OTWC

brochure and promotional coupons - will also be sent from one areas to another's and from house to house. Company website, email address and hotline of OTWC -should also be provided and might need to print together with the above advertising and promotional strategies in order to make convenience for the target customers in getting the information. OTWC committed to giving back to communities - by sponsor scholarship for the local students and this will give OTWC positive publicity.
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PROMOTION STRATEGY
Product placement or movie theater advertising - As everyone knows, India has produced a largest number of films in each year. There about 15 million people see films in India everyday and therefore product placement or movie theater advertising are goods way that can be used to increase reach and exposure among Indias citizen if OTWC can appear in the script or program setting.

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PLACE STRATEGY
Place includes company activities that make the product available to target consumers. According to Kotler ( 2010), the distribution decisions are often interdependent with the other marketing mix variable. An organization distribution strategy is determined by the two major factors including coverage and control. This mean that the coverage of the selling areas must be largest enough in term of population, demand or purchasing power of customers. Both proposed locations of OTWC shops will be at the highly urban locations in Mumbai and New Delhi.

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PLACE STRATEGY

This two cities was chosen because the location are strategic and are home to many call centers where the younger spenders work.

Besides, many collages and University are also located here which allow OTWC to target the young generations. The cities are also major hot spots for tourists, who recognize a multinational brand such as OTWC.
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PLACE STRATEGY
The OTWC in Mumbai will be located at Nariman Point near Churchgate and Gateway to India which is major tourist spot. Nariman Point and the nearby area is very modern and developed. The roads are in good conditions to maintain easy access to the location.

The OTWC in New Delhi will be located in Connought Place which is the large commercial shopping area in New Delhi.

Since the New Delhi is the nearest big city to the world famous Taj Mahal as a popular place for tourists from all over the world.

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