1. Executive Summary Lukuma Pty.

Ltd is a chocolate company which is located in Australia and focuses on producing high quality Belgium chocolate. Recently as the globalization issue arises, the company realizes that there might be opportunities for selling the products offshore to new markets. Although it shows a very good prospect, there are many aspects that a company must consider before entering a new market. The failure to conduct adequate research before entering a new market might lead to the failure of selling the products abroad. In this opportunity, the marketing plan will be aiming to enter Shanghai market due to the increase demand of high quality chocolate. Lukuma Pty. Ltds mission is to provide the best quality chocolate by using the combination of well-known Belgium machines and experienced human resources. The company might use several operation performance objectives such as quality, speed, dependability, flexibility, and cost to produce and market the products. In addition to that, the company might also differentiate its products based on the market demand such as project based or mass production based. Nowadays, the use of technology gives a significant effect toward the firms success in some cases. That is why Lukuma Pty. Ltd is planning to create a website in the future as a tool to connect between company and customers. The use of website will give advantages which will be described later in this plan. 2. Table of Contents 3. Introduction 3.1. Background The increase in globalization has raised companys awareness to sell its products offshore due to the benefits it offers such as the economics of scale production, lower cost of production, increase in market coverage, increase in sales, opportunity to serve new customers, and many others. These advantages have also made some companies to expand its operation offshore. However, the globalization side effects must also be taken into consideration because it may significantly determine companys success. According to Lee (2011), some questions which a company must consider before entering a new market are such as the following: - What is the setting of your industry and company? - What is the motivation for the new market entry/ business opportunity? - What could be the competitive advantage that you could build on? - What kind of value chain could you build on? - How can you create loyal customers and suppliers? To answer those questions, a depth analysis of business elements is critical for company to achieve the goals and objectives of entering new market. 3.2. Purpose and Marketing Objectives The purpose of this marketing plan is to help Lukuma Pty. Ltd expanding its business and selling to offshore/new market for the first time. The target market will be Shanghai

with some adjustments of strategies in marketing, operation, products or services, and other supporting business functions to suit new customers/markets. The plan will also analyze in depth several important issues such as market conditions, industry rivalry, companys internal condition, product differentiation, product range, competitive advantage, and others. 4. Situation Analysis 4.1. Market Summary Frank - Market Needs - Market Trends - Market Description - Market Growth 4.2. Porters 5 Forces Industrial Analysis 4.2.1. Supplier Supplier selection is critical because it significantly influence the product quality. Lukuma Pty. Ltd should consider its suppliers prior the investment in Shanghai. Some suppliers which are important are such as packaging supplier, chocolate molding supplier, raw material supplier, etc. It can come from China local suppliers, Australia current suppliers or other countries supplier. For instance, the company can use local packaging (rotogravure and Kraft Linerboard) producers because it gives price advantages since the market for such products is very competitive. However, since the product emphasizes Belgium quality as the most important criteria, there should be a very strict raw material selection to guarantee the product quality. 4.2.2. Buyer Chocolate consumption will be different for some countries. For instance, according Duncan Freeman (2005), in 2005 Switzerland had an average annual per capita consumption of 9.6 kilograms per person whereas China consumed approximately 0.7 kilograms per person as illustrated on figure 1.

Source: Asia Times Fig. 1 Annual Per-Capita Chocolate Consumption 2005 In Shanghai, the opportunity is widely open because of the massive population of 19.4 million (The Economist, 2010) and people capabilities to match his/her

income with his/her consumption of high quality chocolate. For instance, based on The China Observer (2012), Shanghais GDP in year 2011 was around 12,784 USD, which was about the same compare to Brazil. In addition to that, Lukuma Pty. Ltd must be aware of the increase in competition because it affects the buyers bargaining power to choose other products which suit their demands. 4.2.3. Entry/Exit barrier Lukuma Pty. Ltd must read and understand government regulation before importing products to or establish an operation in Shanghai. This will include regulations from host country government toward tariff of imported goods, etc. Understanding the nature of host country government toward entry or exit barrier is crucial in order to give the company flexibility in their business. Other considerations such as low tax, low tariff, and low interest rate might influence the management decision to sell offshore. 4.2.4. Substitute product There is no doubt that people love chocolate due to its rich flavors. Chocolate companies nowadays modify the regular chocolate product into several different product lines such as chocolate candy, chocolate cake, chocolate biscuit, etc. However there are many disadvantages of chocolate which are related to health issue such as heart disease, allergies, diabetes, stomach disturbance, and depression (Gilead Institute). That is why people start to find substitute product to replace chocolate without changing its rich flavors. Carob is a good substitute product for chocolate because it is nutritious, delicious, low fat, low calories, caffeine-free, and does not has health issue compare to chocolate. Lukuma Pty. Ltd should concern with this threat because nowadays people are more concern on health issue. 4.2.5. Industry Rivalry Entering Shanghai market is a challenging task because there are massive chocolate competitions there. Since Lukuma Pty. Ltd focuses on high quality chocolate using Belgium technology and experienced Belgium human resources, it should focuses only on customers who demand for high quality chocolate. There are many other chocolate companies in Shanghai which provide high quality products such as Godiva, Ferrero, Jeff de Bruges, Hersheys, and many others. Key to success (discuss later) will determine the companys competitive advantage. 4.3. Porter Diamond Model 4.3.1. Factor Condition It is obviously clear that one of the major factors which make companies invest in China is the low labor cost. This advantage has made companies achieve competitive advantage because lower cost of production can significantly boost companies profit.

Fig. 2 China Province and Region Minimum Monthly Salary 2010 2011
$250.00 $200.00 $150.00 $100.00 $50.00 $-

2011 USD 2010 USD

Fig. 3 China Province and Region Minimum Monthly Salary 2010 2011(USD) According to the above diagram, we notice that Shanghai has a low minimum monthly salary of 1.280 RMB or equivalent to 194.95 USD. If Lukuma Pty. Ltd wants to establish its manufacturing in Shanghai, it can gain benefits because of the relatively cheap labor and good infrastructures for product or supply delivery. Other regions such as Tianjin offers lower minimum monthly salary which may be one attractive factor to achieve lower cost of production. However company should consider the transportation cost to find out if the lower cost offset the benefit. 4.3.2. Demand Condition The China massive population is an attractive factor which leverages companys profit. According to Bruno Lannes (2011), head of Bains Consumer Product and Retail Practice in Greater China, the China consumer has moved from niche emerging market to a main target for luxury goods. This means that in some provinces or cities especially Shanghai which has a higher income, people are demanding for higher quality products or services, including chocolate. 4.3.3. Related and Supporting Industry Suppliers availability is one of the most important considerations for companies before entering new market. For instance, as a chocolate company, Lukuma Pty. Ltd will concern on the supplier selection for its raw material (chocolate powder, milk, peanut, etc) and packaging. Supplier for raw material can come from the existing supplier from Belgium or Australia to maintain the product quality. The local company selection can also be taken into consideration as long as it enhances the product quality. For the packaging supplier, Lukuma Pty. Ltd has

many alternatives because nowadays, China has a lot of packaging manufactures such as Kraft linerboard, plastic packaging, etc. (For more information please refers to www.cpta.org.cn). 4.3.4. Firm Strategy, Structure, and Rivalry Some countries do not allow foreign companies to operate in their market without any interference from local party. It means that the business can be established only if there is local party who join the business. Lukuma Pty. Ltd should understand how they can import the product to Shanghai or do the investment in Shanghai. According to Hofstedes cultural theory (1984), China is categorized as collectivism country. That is why company must understand how culture influences the business. Industry rivalry also influence the way company do business and it is related to the previous Porters 5 forces. 4.4. SWOT Analysis Anas - Strengths - Weaknesses - Opportunities - Threats 4.5. Competition Raj 4.6. Product Offering Max 4.7. Keys to Success Dony (competitive advantage) 4.8. Critical Issues Dony 5. Marketing Strategies 5.1. Mission 5.2. Marketing Objectives 5.3. Financial Objectives 5.4. Target market 5.5. Positioning 5.6. Strategies 5.7. Marketing Mix - Product (Product life cycle) - Price - Place - Promotion 5.8. Marketing Research 5.9. Website 6. Financial Analysis Dony (EOS, cost vs benefit) 6.1. Break-Even Analysis 6.2. Sales Forecast 6.3. Expense Forecast 7. Implementing and Controls

7.1. Implementation 7.2. Contingency Planning References Lee, T.B. 2011, Considerations When Entering new Market/Business Opportunities, viewed 27 April 2012, <http://eazun.wordpress.com/2011/01/19/considerations-when-entering-new-marketsbusiness-opportunities/>. Freeman, D 2005, EU Chocolatiers Chase China Market, Greater China, viewed 28 April 2012, < http://www.atimes.com/atimes/China/GG28Ad02.html>. Carob n.d., Gilead Institute, viewed 28 April 2012, http://www.gilead.net/health/carob.html. Yan, Z 2010, Chocolate firm Godiva eyes sweet prospects in Shanghai, China Daily, viewed 28 April 2012, < http://www.chinadaily.com.cn/business/2010-01/30/content_9401690.htm>. Na, Z 2012, Shanghai, Beijing and Tianjin Lead Country in per Capita GDP, The Economic Observer, viewed 28 April 2012, <http://www.eeo.com.cn/ens/2012/0203/220140.shtml>. All the parities in China n.d., The Economist, http://www.economist.com/content/all_parities_china. viewed 28 April 2012,

China Raises Minimum Wage Up To 21% n.d., Business-in-Asia, viewed 28 April 2012, http://www.business-in-asia.com/china/workers_wage_ch2011.html. Bain Study 2011, 2011 China Luxury Market Study, Bain & Company, viewed 28 April 2012, <http://www.bain.com/offices/china/en_us/publications/2011-china-luxury-market-study.aspx>.