EXECUTIVE SUMMARY

Yuan is the first Taiwan brand specializing in making handmade soap out of natural ingredients
which was established in 2005 with its interesting background of brand story and business
philosophy. Yuan is at an exciting and expansive stage of development to foreign markets,
especially entry to China markets. To guide this next stage of growth, we conducted a major
planning process for Yuan to enter Beijing. We solicited input from a broad range of market
researches of China natural Soap-Bath-Skincare (SBS) markets as well as Beijinger’s
consumption patterns. Based on this process, we start with clear understanding of internal
resources analysis with VRIO framework then develop a disciplined long-term approach to
expanding the scope and impact of our work. This strategic plan provides a clear blueprint for
Yuan’s future in Beijing market for the next 5 years. At its core, the plan shows the way to
avoid the trap of proliferation and how to obtain the sustainable competitive advantages in this
market. It outlines a focused direction for developing the brand image, product innovation and
distribution channels with the niches market strategies.
 CHAPTER 1: EXTERNAL ENVIRONMENT ANALYSIS

In this section, we aim to answer the first question: Why Yuan should enter to Beijing market?
We start by looking at the way in which forces from Marco-environment affect industry
structure and creates and shapes the opportunities and threats to Yuan by offering the PDEST
model. They are demographic, economic, social, political and technological in which
companies and industries are embedded.

A. PDEST Analysis

1. Political & Laws forces

China’s recently announced 12th five-year plan aims to transform its economic from an
investment-driven dynamo into a global powerhouse with a steadier and more stable trajectory.
However such companies which belong to industries of natural SBS and cultural creative
categories will benefit from the government’s efforts to retool the Chinese economy and to
boost domestic consumption. For example, Chinese government’s involvement in legislation
and regulation has helped to strengthen the safety credentials of SBS products and indirectly
has increased the demand for naturalness in SBS products. In addition, the government’s push
to assure higher product safety and quality and to encourage environmentally friendly
consumption habits gives companies with a solid reputation for high standards an opportunity.
Entering into Beijing will also give the advantages of international connectivity and keeping the
companies close to central government and therefore abreast of changing policies. Besides the
opportunities generated from political environment, foreign companies have to consider the
threats from Beijing markets. Moreover, once foreign companies want to invest in China, they
need to disclose the full ingredients of their products as well as technology which make them
become very vulnerable of being copied. It usually takes a lot of time for foreign companies to
deal with the bureaucratic administrative procedures and heavy taxed. For example, the import
tax rate for wash up soap and organic skin care products is 130%. Also, because of protectionist
import policies, foreign brands can have a hard time launching new products, leading to a lot of
re-promoted shades in makeup campaigns.

2. Economic forces
Changes in economic profiles have been and will continue to be the most important trend
shaping the city consumer landscape. The Beijing people are certainly getting richer fast: the
per-household disposable income of urban consumers will double between 2010 and 2020,
from about $4,000 to about $8,000 (about 24,000 – 48,000 RMB). At present, there is an
expanding rank of the middle class in the capital as grown to 5.4 million, some 40 percent of
the city's permanent residents. They are “mainstream” consumers, relatively well-to-do
households with the average monthly income is about 5,923RMB per month. The majority of
the city population still consists of “value” consumers— resident who are paid only an average
of 1,787.83 RMB per month. A tiny group of “affluent” consumers, top end of the middle class
is made up of 675,000 Beijing people whose average monthly income is 9,666.67 yuan. These
divergences have presented potential entry into Beijing with a choice: to target only
“mainstream and affluent” consumers or to stretch the brand to serve the “value” segment.
However, the wealth of so many consumers is rising so rapidly, many people in the “value”
category will have joined the “mainstream” one by 2020. Indeed, “mainstream” consumers will
then account for 51 percent of the city urban population and will be the target markets of many
brand names in SBS industry. The number of wealthy households in Beijing continues to grow
at an annual rate of about 16 percent for the next five to seven years. These rising wealthy
middle and affluent classes in Beijing with are key drivers for consumption growth, especially
in the central areas such as Changping, Xicheng, Dongcheng, Haidian, ChaoYang, Fengtai.

3. Demographic forces
The current population of Beijing city is estimated to be about 20,693,000, which is an increase
of about 5.5% from the last record of the population. Based on the total land area and the total
population of the city, the population density of Beijing is estimated to be about 3,300 people
per square mile. It was reported Beijing will see an increase of senior citizen every year until
2020. This highlights the huge potential for caring products and services for the elderly.
Specifically, the aging population with higher buying power in Beijing will facilitate the
growth of SBS products with the increasing need for anti-aging and complete caring therapies
and services. Also, the great imbalance of sex ratio in city also stimulates the demand of
personal care products for men while being a threat of specialized products for female.

Rapid economic expansion means that the number of immigrants and foreigners living in the
city is increasing who bring to Beijing their hometown customs, lifestyles, shopping habits and
brand preferences of high quality products. These new populations imply the requirement for
variety and different segments of products and services in SBS industry.

4. Social trends
Understanding of Beijing’s changing economics and its impact on the profiles of consumers
help to identify some key opportunities for the industry. Even in the face of rising inflation,
Chinese consumers are more confident this year about their financial prospects. More and more
consumers choose among a growing number of favorite international brands. In addition, there
are significant cultural values and social trends that shape the consumption behavior of Beijing
consumers. For example, Confucians value of happiness, simplicity and harmony of their life,
therefore when asked about personal care products, Beijing consumer rarely lists solely
physical attributes; but mental attributes like helping them invest in intimate ties, embrace
society, being successful, having fun, living healthier, meeting one’s obligations and education
themselves also play the equal role. Beijing consumers also rely on the concept of unity and
balance between nature and humanity and that helps explain their preference for “all-in-one”
products. These values and beliefs make the Beijing market rather unique and that bring many
opportunities for natural and cultural creative products to fit into their holistic lifestyle.

According to the study of McKinsey& Company, wealthy consumers living in the four largest
cities of China (i.e. ShangHai, Beijing, GuangZhou, Shenzhen) tend to expand in the next 5
years. More interesting, price awareness is really low among the Beijing hypermarket shoppers,
implying that price may be not a big concern towards these customers but the perception of
product quality. In Beijing naturalness is perceived as being safer, healthier and more premiums,
and consumers are increasingly attaching emotions to their bath or shower sessions, with many
treating baths and showers as a pampering and relaxing indulgence; aspects such as
aromatherapy, fragrance and gifting that connect with these extended lifestyle ideals, are
therefore worth exploring in order to connect better with consumers’ lifestyle needs.

5. Technology & environmental issues

There are 794,500 internet users in Beijing surfing online for an average of 19.81 hours, about
40 minutes every day for each person in June, 2013 in addition to 71,200 ISDN users, including
59,800 new surfers from January to June. Online is becoming an important sales channel for
SBS products, currently third behind supermarkets and hypermarkets. The growth in online
penetration and the rise in the popularity of online shopping are fueling e-commerce growth.
Women, consumers with mid-to-high income and to some extent the 20-39-years-old are the
key drivers of SBS purchases online. With two fifths (42%) of the population already online
and 75% of the online population on mobile, the digitization of consumer culture has provided
a strong foundation for brands to increasingly engage consumers on the internet. According to
the study taken by Fudan University, consumer confidence decrease when environmental
quality reaches a low level. If pollution still increase, consumers tend to transfer to purchase
low-pollution products. Since consumers in China start to care about environmental issues, this
is an opportunity for companies whose products are perceived to be environment-friendly.
B. Conclusion
After analyzing the external environmental analysis and the distribution trend we come
with these suggestions why Yuan must enter Beijing, from Beijing's demographic forces
we realized that there are potential market for Yuan in the male products as well as the
senior population products. From the Social trend Yuan needs to educate and relay its
brand story as well as the cultural philosophy such stories are valued by Beijing people,
they cherish culture despite its fast urbanization. Despite the riskiness of the Chinese law
of disclosing the product formulas for any producers’ investor entering in China, there are
still benefits which Yuan as natural product producer can derive from the latest reforms
of protecting its environment. Beijing househol ds are getting richer and less price
sensitive as well as very aware of the benefits of natural products to their health and
appearance. In addition to the social trend Beijing people love and adore as well as trust
well-known international brands than the local ones in so doing Yuan needs create brand
awareness and emphasizes its MIT. The last suggestions for Yuan to be successful in
Beijing they should follow the latest trend of the market by using more of internet
marketing and online selling because Beijing people heavily relied online for shopping .
Finally, Yuan needs to provide more services such as herbal consulting and educating its
customers more proper skin care procedures and techniques.
 CHAPTER 2: DYNAMICS OF THE BEIJING NATURAL SBS IDUSTRY

This section studies in detail analyze the forces that shape the competition of the industry.
Using Porter’s five-force apporach, the analysis aims to identify the key stakeholders,
examining the competition and significant strategies, finally, performing a characterization
of user’s behaviour based on consumer trends. Finally the implication for strategy planning
will be suggested in the last part.

A. Five-force analysis

1. Rivalry among existing competitors

Before starting a new business in an area, understanding the current market is very important.
Mintel consumer report of China’s Soap-Bath-Skincare (SBS) product in June 2013 shows that
the market value reached RMB20.1 billion, growing at a compound annual growth rate (CAGR)
of 11.6% from 2007-12. In addition, according to Domestic-Overseas Flavor Fragrance
Cosmetic Information Journal (2011), the annual sales of China soap are about 20 million tons,
and shower gel accounts about 10 million tons. The demand of soap and shower gel is
exuberant; especially shower gel, the annual natural growth rate is above 25%. The SBS
industry has been considered to be fragmented and intensively competitive. There are a lot of
small or medium-sized competitors, not only the domestic brands (e.g. BAYANKALA,
Organic Earth, Three-bean Soap, etc.), but also the international brands (e.g. Lush, The
Bodyshop, LOCCITANE, Gamila Secret, etc.) sharing the market with the same target market
of middle to high range.
Customers have diversified needs of product features which may be higher differences between
market segments. Enterprises can growth through developing new product concepts to form
new market segments. Brand and channels are the most important factors of competitive
advantage (Domestic-Overseas Flavor Fragrance Cosmetic Information Journal, 2011) In order
to build on the ‘bath and shower care’ concept, brands will need to focus on extending bath and
shower product benefits, collaborate with bath spas in China, for example BaYanKala has
already Beijing or invest in premium or specialty stores in order to strengthen their brand and
premium credentials such as the Body Shop, L’occitane or Organic Earth. Currently,
incumbents in the industry have followed differentiation strategies to outweight the competitors
with clear understanding of target markets, espectially in middle-high segments who have
dedicated needs of product quality and brand image of being healthy, natural and organic.
Therefore, to be successful in this industry, companies should demonstrate their capabilities to
build and bring offerings to the market with good brand image, high quality products and extra
services, and smart choices of distribution channel. Besides, the market share of the non-store
retailing channel is gradually increasing. This channel includes direct sale and sale over the
internet. Companies relying on direct sale managed to create a powerful sales network; it was,
to a large extent, enabled by the characteristics of the new customers who are just entering the
market, expecting professional advice, analysis of their needs and support in choosing the right
products. It is predicted a steadily decreasing importance of department stores can be noted for
the incumbent rivalries in this industry.

Table 1 Established companies in natural SBS-the origin, price range and main ingredients

Country Price(RMB) Ingredient

BAYANKALA China 68-98 chinese herbs

Organic earth Canada 48 herb, honey,milk

ELVENA Japan 198 bamboo

Lush U.K. 28-66 fruit, herb

The body shop U.K. 40 fruit, herb

LOCCITANE France 30-90 flower

Three-bean Soap China 76-128 milk,flower

Gamila Secret Israel 196-339 herb, flower

In the study of global beauty industry shows that there is a systematic change in the pattern of
distribution channels which took place between year 2000 and 2010, are presented in following
table below.
 Table 2 Trend of Global natural SBS Channel (2000-2010)

Source: Barbalova 2011, Moulin 2012, Euromonitor International.

As we can see the market share of the non-store retailing channel is gradually increasing. This
channel includes direct sale and sale over the internet. It was, to a large extent, enabled by the
characteristics of the new customers who are just entering the market, expecting professional
advice, analysis of their needs and support in choosing the right products. Another noteworthy
fact is the systematically growing share of hypermarkets and supermarkets as a sales channel.
This is partly due to the expansion of the retail chains as well as due to the recent introduction
of shops with regard to beauty and personal hygiene segments. The latest trend in this industry
is the arrangement of shop’s internal beauty section in a way that resembles specialized
drugstores and to have their staff serve customers according to specific standards, including
professional advice and comprehensive assistance in choosing products for individual
customer’s needs – just like in drugstores (Falk 2008).
For what concerns the remaining sales channels, a steadily decreasing importance of
department stores can be noted. Those stores used to be the primary distribution channel for
natural SBS until just a couple of years earlier.
2. Potential entrants
Since the entry barrier of this industry is quite low therefore the strong this competitive force is
in Beijing market. Currently, the established companies have not developed strong brand
loyalty nor enjoy the cost advantages, especially for hand-made natural SBS category;
incumbents usually lacks the economies of scale of mass producing standardized outputs or
gaining discounts on bulk purchases of raw materials and component parts. Besides, customer
switching costs is getting lower when they perceive the better offers from new entrants.
Continued growth in income has meant that consumers are increasingly willing and able to
trade up to buying higher value and better quality products. That said, premiumisation is
somewhat lacking in the SBS market in China, and represents an opportunity for growth.
Moreover, the Chinese government’s involvement in legislation and regulation has helped to
strengthen the safety credentials of SBS products and the welcome competition in policies will
make the risk of entry by potential companies become higher.
We can divide the companies that are not currently competing in natural SBS but have the
capabilities to enter if they choose into three types of potential entrants. First type is the
companies have been already in natural SBS industry for several years but haven’t entered into
Beijing market yet, for example, Just Herb, Escents, Ifshare, Organic Earth Fiji and so on. Also,
the famous skin-care producers such as Burt’s Bee from the U.S. may enter this market in the
near future if they smell the opportunity from this promising market. Besides, in recent years,
Korea consumption styles are getting popular in China big cities, hence, the Korean SBS
producers such as The Faceshop, SkinFood, Laneige, Sulwhasoo, and Innisfree etc. may enter
into this market.
Second type is the companies currently compete in SBS industry but haven’t entered into
natural segment at Beijing markets. They are Chinese domestic soap brands such as Diao Pai

(雕牌), Liby(立白), Keon (奇强) and Lonkey(浪奇) Diao Pai (雕牌) is a Zhejiang (浙江)

company which operates under the Nice ( 纳爱斯) Group. In its’ more than 50 years of

development, Diao Pai established numerous strategic partnerships with several top 500

enterprises. Liby (立白) was founded in Guangzhou (广州) in 1994. It operates in the sectors of

cleanser essence, laundry detergent, toothpaste, paper products and so on. Keon (奇强) was

founded in Nanfeng (南风), Guizhou (贵州) province in April, 1996. Keon company targets

people in the countryside as their client base. Currently the company owns 5 branches and 19

different brands. Lonkey (浪奇) was founded in 1959 and built up its brand image to create a

brand reputation as an established player in the industry. Besides, international soap brands in
China from the top global stakeholders include Unilever, Procter and Gamble, Colgate
Palmolive and Johnson & Johnson. These companies compete among each other with strong
brand identity, big advertising budgets, well estalished marketing channels and the capability to
enter this market. Third type of potential rivals are cross-industry companies like organic farms
that offer consumer organic products such as Natural Taste Organic Farm, Shangrila Farms,
Green Cow based in Beijing also make the future competition will be fiercer in the industry.
3. The Substitutes
The close existence of substitutes in the industry poses high threat because there are many
substitutes for natural cleaning products since any other artificially added shampoos, or shower
gel do also perform the same cleaning function such as P&G, Unilever or Loreal’s products.
Consumer switching cost is getting lower because substitutes have high availability and
consumers have the difficulty to distinct the effectiveness between them. Besides, most of
substitute products are much cheaper and some producers have high brand image along with
increasingly shift from the basic soap bar to the more convenient format of liquid soap/shower
gel can threat the profitability of the industry.
4. Bargaining power of suppliers
In order to ensure high quality of materials and achieve corporate social responsibility, most of
companies in this industry cooperate with suppliers and purchase with fair trade price. Such as
Lush, The body shop and LOCCITANE, they provide professional, technical and social training
to young people and women from low-income families or the third world countries teaching
them how to produce materials and buy materials form them. BAYANKALA which is domestic
company in China also signed contracts to local suppliers. The bargaining power of suppliers is
low because most companies in natural SBS industry control almost whole value chain so as to
maintain stable and high quality of materials.
5. Bargaining power of buyers
The fast-growing Beijing middle class had a crucial impact on sales volume and consumption
patterns, particularly in the premium segment. Changing life stages and changing age structures
are the most important factors influencing Chinese consumers’ choices of personal hygiene
products. Study of The Chinese Personal Hygiene Market: What Consumers Use and Why in
2013 shows that older consumers have the largest share of the Chinese Personal Hygiene
market by value, followed by Pre-Mid-Lifers. This large group, much of it quite wealthy, can be
characterized as demanding customers, who attribute a lot of value to the quality of their
purchases, expect professional advice and prefer skincare products with a high technological
added value. Moreover, raising awareness of dangers related to exposure to polluted
environments is another factor contributing to the demand growth in this sector. Sales of skin
protection products as well as anti-blemish products, used for skin disorders are also growing.
Currently, women consume more Bath & Shower Products than men. In the recent years, as
Beijing continues to be the leading position in nation, female consumers begin to discover their
own “beauty identity” and to promote their own beauty standards. Beijing's growing middle
class (identified as those earning RMB 106,000 – 229,000 per year, roughly $17,000 –
$38,000 USD), has been a main driver for the consumption of the industry. Also the affluent
shoppers have average annual earnings of between $19,500 and $90,000 and are expected to be
the driver for the future growth of the markets. This growing MAC class is getting more and
more sophisticated; as a consequence, there is a will to distinguish themselves from the crowd,
leading the consumers to more exclusive brands.
We can look at the table 2 of dynamics of natural SBS industry in Beijing and their predicted
future changes.
Table 2: Dynamics of Beijing natural SBS

Dynamics Recent Future (5 year predicted)

Consumer Low Get more power
Rivalry High Higher
Substitute High Higher
Supplier Low Low
Potential entrant High Higher

Conclusion of Five-force Analysis: Firms as Yuan might get into the proliferation trap in this
industry because the products and brand are easy to imitate, low entry barrier to a niche market
and product differentiation is easy to imitate. It is caused by multiple threats due to substitutes,
imitators, market fragmentation, and new product innovation. Also, many new price-benefit
positions will surround and erode the firms’ product uniqueness. It is hard to fight everyone in
everywhere unless firms act as the entrepreneur innovator who can always focus on the first-
mover advantages.
B. Suggestons for firm to avoid the trap of proliferation
Due to the emergence of more discriminating educated and wealthy consumers, the innovative
research and development for new raw materials and finished products, the state of the art
technology to enhance productivity and reduce cost and the smart choice of segmentation
strategies, to help firms escape from proliferation situation, we provide several suggestions:
Where the market is crowded, companies try to differentiate their products by new forms or
new packaging concepts. They can match the big player’s expansion strategies by expanding
into niche markets where brand loyalties are yet to form, by quickly identifying and meeting
consumer needs, and by offering more competitively priced products. Firms can choose to
enphasize in the importance of added-value products to boost market value, or practice the
environmental approach with the development of eco-friendly products, containing e.g. natural
ingredients, but also to the use of biodegradable packaging and refill packag. Ecolabelling is
also a simple and cost-effective way to communicate environmental aspects and commitment to
purchasers and consumers. They need to employ the communication strategy beyond
advertising to gain credibility in local markets and thereby they build tacit endorsement for
their products through the sponsorship of activities, conferences and campaigns, undertaken by
local professional bodies.
- About market segmentation and product claims: The natural SBS market is
traditionally segmented according to gender and age. However, there are some concepts used in
products aimed to segment the market and to attract specific consumer groups:
+ “Soap as experience”: As the style of life at work and at home becomes more
and more stressful, relaxing soaps and toiletries that can at the same time be used quickly
constitute a strong category group within the industry. Among these products there can be
included aromatherapy products like scented body washes, as well as other liquid and gel
soaps.
+“Let’s natural”. Natural products are another fast growing category, reflecting the
increasing preference of consumers for less synthetic and more "natural" or "botanical"
products. Such products may be accompanied with a package that shows affinity with the
natural concepts.
+ Ethical and ecologic: There is a rising demand for raw materials, which contain
no animal by-products and for products, which are not tested on animals. Many soap and
detergent manufacturers rethink their whole production lines to respond to theconcerns of
consumers. Efforts have been done to establish industry guidelines for environmental claims
and labelling, and advertising and labelling have already been changing to meet the new
requirements.
+ Maximizing care: Gentler and skin-friendly products have been another major
strand of development, with products designed to prevent irritation and soothe skin complaints.
Many new products are therefore pH-balanced, offering gentle efficacy and increasing number
of products is dermatologically tested.
+ Highest innovation. While R&D does not appear to be a significant factor in
limiting companies’ entry to the cosmetics market, it should be noted that the natural SBS
industry is very dynamic and is characterized by innovation and a high rate of product
development.
+ The emphasis on men. Proof of this is the emergence of increasingly shampoo
formulated exclusively for men, for instance, anti-dandruff shampoos.
Given these trends in segmentation, the following table shows the main claims attributed
to the products surveyed by Mintel in 2011 in global SBS markets. It gives a guidance about
which concepts and attributes companies want to communicate and to relate to their products to
the Natural SBS. The table illustrates the evolution of the most used claims in new products
launching with the most interesting claim is "ethical & environmental" which, apart from its
increasing importance; is one of the most often used with more than 40% of new product
launches incorporating this claim. Therefore, this is a clear indicator of the growing importance
of products that are “environmentally friendly”.
 - Target markets: Employ the classification of target market from the study of
Style-Vision Asia in China fashion market, our suggestion for target market strategies of this
industry concludes 2 segments:
+ The children of the revolution: Age of 35 and older, live in Changping, Xicheng,
Dongcheng, Haidian, ChaoYang, Fengtai districts who grew up in a world without brand
names, television, or shopping malls. They are wealthy and looking for decent and
comfortable qualities and steer away from excessive frivolity. They also expect professional
advices and prefer skincare products with high technological added and exclusive values.

+ The children of reform: age from 25-35, these post-1980s generation did not endure
the same political and economic hardships that their parents did. Products of the one-child
policy, they were educated according to rigorous standards, but in a context of optimism,
consumerism and entrepreneurship. A transitional generation, they are loyal to their family
duties and jobs, but also have their own dreams, resulting in increased fashion spending. For
shopping patterns, they rely on recommendation, fashionable and high demand of quality.
Since they live in demanding lifestyle that combines work, leisure and social activities, they
look for products that help them make calm. This group of consumer is quite less price
sensitive, but care about the ingredient, functional characteristics of products. They usually
own a series of related brands and have high brand loyalty
 CHAPTER 3: FIVE-YEAR PLAN IN BEIJING

1. Stage 1: 1st-2nd year

In the first stage, the objective of the brand strategy is to create brand recognition and let
consumers believe that “Yuan is the best specialist of herbs in Taiwan.” At the beginning of
entering Beijing market, Yuan should select the top ten hot products which are the best sales in
other countries and provide consultancy services in order to build trust with consumers.

As for the channel, Yuan should choose joint ventures or agents to enter Beijing market
because Yuan do not understand Beijing market as well as them. It’s easier to build brand
recognition by brand reputation of partners. Otherwise, the trend of no-physical channel is
rising now in Beijing. Yuan should develop web store to provide costumers easier to buy
Yuan’s products.

About the marketing, Yuan should mention about MIT effect to make Beijing people believe
quality of Yuan’s products. Yuan also should build public relationship with government and
powerful man and build relationship with consumers. Besides, Beijing people believe the
information on the Internet. So that Yuan should cooperate with bloggers, whom will influence
consumer behavior by word of mouth. To advertise in fashion media, such as VOGUE, is the
other way to communicate with high-end costumers.

2. Stage 2: the 3rd-4th year

The second stage of the brand strategy is to let Yuan deeply rooted in the customers’ mind, and
delivers the image of “Yuan is the one that can brings calm to your soul.”

In the second stage, after capture the preference of the customers, Yuan are able to increase the
range of products to meet consumer demand. For example, create localization products by
OEM and ODM. Besides, Launch limited seasonal products irregularly in order to stimulate the
consumption. As for the services, Yuan should establish the experience zone in the stores so
that can increase the interaction with the consumer.
As for the channel, Yuan should cooperate with dealer and agent to establish the direct selling
store in Beijing. By owing and running a direct selling store with the atmosphere of Yuan, not
only can build the brand image but also can deliver the spirit of Yuan to customers directly.

About the marketing, Yuan should highlight the brand stories in order to be closer to customers
‘mind. In addition, build the social image and corporate responsibility by highlighting the
specialist of herbs.

3. Stage 3: Five year later

The last stage of brand strategy is to build the brand loyalty. Be customers’ friend and let them
know “Yuan is the friend who cares about you.”

In this stage, there are four main goals of product and service. First, find niche market which
brand loyalty has not formed (like infant and male series) is a chance to capture territory.
Second, create symbolic product with artist whose style relates to art of Chinese culture. Third,
cooperate with R&D institute in Taiwan and Beijing to innovate products. Forth, copy the
experience of planting herbs could be a long-term strategy in to create localize product.

As market getting more mature, franchising could help Yuan increase its stores and achieve
cost-efficiency. Also, create composite regimen platform to attract more partners enter this
business and create more profits.

To achieve brand strategy, there are several marketing advices as following: developing loyalty
program e.g. exclusive advisor of member and member club.

Joint marketing with good image partner like high-end hotel, restaurant, and yoga club is a
good way to enhance Yuan’s brand image. Cooperate with same concept of firms to operate
composite products and services to become the cultivation platform in great China region.
 Table 3: Summary of the suggested strategy plan for Yuan in the next 5 year

Stage 1: Year 1-2 Stage 2: Year 3-4 Stage 3: Five year later

Brand Create brand recognition Brand deeply rooted in the minds Build brand loyalty
strategy

Value Yuan is the best specialist of herbs in Yuan brings calm to your soul. Yuan is the friend who cares about
proposition Taiwan. you.

Product/Serv Top ten classic products Create localization products by OEM Find a niche market which brand
ice To provide consultancy services and built and ODM. loyalty has not formed (like infant
trust with consumers. Launch limited seasonal products and male series)
irregularly in order to stimulate the
Create symbolic product with artist
consumption.
whose style relates to art of Chinese
Establish the experience zone in the
culture
stores.
Channel Joint Ventures or agents: Direct selling store: Cooperate with Franchising
If our partners have reputation and dealer and agent, transferring the - As the market matures, gradually
understand consumer behavior in Beijing, successful business model directly to increasing the number of physical
Yuan will easier to build brand Beijing. stores。
recognition. - Build the consistent brand image.
- Achieve cost-efficiency
 Develop web store and follow the rising - Create the atmosphere of Yuan. Composite regimen platform
of no-physical channel.
-Deliver spirit of Yuan to customers
directly.

Marketing MIT effect Highlight the brand stories and spirits. Loyalty program
Build public relationship with Build the social image and corporate -e.g. exclusive advisor of member,
government and powerful man responsibility by highlighting the member club
Build relationship with consumers specialist of herbs. Joint marketing with good image
e.g. membership card system Enhancing the brand value by partner
Word of mouth cooperating with partners. e.g. high-end hotel, restaurant, and
e.g. word of mouth by bloggers yoga club
Enter fashion media
Cooperate with same concept of
e.g. VOGUE
firms to operate composite products
and services
Price To set Yuan as a High-level products. Beijing people think that if the price is high, the quality will be better.