Analysis of whether Jamba Juice should enter China MOR 492 1. Ariel Furman 2. Tuomas Kuusela 3. Anna Lin 4. Jessie Rubio 5. Vincent Tsao 6. Jan Dong Vejdiksen

1. MOR 492
Team Six
Professor Voigt
Ariel Furman
Jennifer Mo
Anna Lin
Jesse Rubio
Tuomas Kuusela
Jan Vejdiksen
Vincent Tsao

2. Content
•
A. Executive Brief
3
•
B. Juice and the Beverage Industry
4
– What is Juice?
– Reasons to Enter China
– 6
– Country and Business Environment Analysis
– 7
– The Role of Juice in Chinese dietary
•
– 5
– 10
C. Jamba Juice and The Competitive Advantage
11
– Business Model
– Value Chain
– 12
– Case Study: The Keys to the Success of Starbucks and HaagenDazs in China
•
– 11
– 13
D. Chinese Entry Strategy
14
– 16
– Partnership: SPC Franchising
– 20
– Penetrate: Identify and Appeal to the New Mainstream
Consumers in Tier 1 Cities
– 21
– Present: Create The Ultimate Jamba Juice Experience
•
E. Implementation
23
– Financial Projection
– Implementation Timeline
•
– 23
– 24
F. Appendix
25
2

4. Executive Brief
It’s More than Juice, It’s The Experience
Key Challenges
Objective
Generate $50 million
revenue in China
within the next 5 years
Recommendations
How to make Chinese
consumer purchase specialty
drinks and create a strong
brand perception
Partner with SPC Group to
open café franchises in
Shanghai and Beijing
Penetrate through high brand
presence and visibility
Present The Jamba Juice
experience to attract Chinese
consumers
Why
• The US market is saturated for Jamba Juice, and Jamba Juice needs to find the
new resource of growth to satisfy investors and fulfill the growth imperatives
• 12% CAGR increase in China of juice consumption and the increasing middle
class suggests that there is a high potential demand
• Competitors such as Smoothie King have already entered China; Jamba Juice
has to move fast or competitors could create barriers to entry
Meet
• Chinese consumers associates foreign brands with higher quality, and they are
becoming very open to westernized products and lifestyle
• Competitors have established locations in the food courts of popular urban
centers with live freshly squeezed juice within an average of $3 price range
• Juice traditionally has been perceived as a commodity instead of a premium
indulgence. The consumption is low compared to developed markets, thus
Jamba Juice needs to create demand into the Chinese diet
Bring
Build
• Jamba Juice should focus on bringing The Ultimate Juice Experience, including
the commitment to a healthy, fun, and energetic lifestyle. It is a place for people to
recharge, meet, and relax with a healthy drink
• Jamba Juice should build a strong brand and create excitement of the products by
attractive indoor decorations, quality products, and premium locations. It should
transfer the most of western experience with slight local market adaptation
How
• Jamba Juice should enter China through franchising placed in Tier 1 cities
(Shanghai and Beijing)in the next five years
• Jamba Juice should partner up with SPC Group (Relationship already
successfully established in Korea), which has had success in opening franchises in
China to help expand Jamba Juice’s brand name and achieve high visibility
• Star employees from United States will train the new-hires in China. It is
important to ensure the successful execution of the promise above, to bring
premium quality products and services in China.
• Creative marketing strategies, such as partnership with gyms and flexible
4
promotions should be explored to speed up the penetration process.

5. Jamba Juice is An Experience
What is Juice?
Small Market Size
Juice = Health
Small global market
Coffee
Tea
Highly versatile, flexible beverage
Juice
Diversified Products
Easy Entry
All you need is fruit
Easy entry and incorporation
Lifestyle-based, and health focused
This is Jamba Juice
Product Portfolio: Smoothies, Freshly
Squeezed Juice, baked goods, wraps, snacks
Beverage/Food Retail
“High quality, better-for-you”, Jamba continues to develop
innovative products made from premium ingredients
Jamba dedicates to raise the awareness of a healthy, active lifestyle
by improving store designs, sponsoring athletic events, and ongoing
health-focused marketing promotions
Specialty Retail
Healthy
Drinks Cafe
The Ultimate Jamba Experience
Social
Experience
Customized
products
Convenience
Basic
need
for
a
drink
Brand
Equity
An
energy
drink
• Jamba juice will satisfy customers’ basic need for a
drink that relieves thirsty. However, the juice
contains energy and liveliness, conveyed from
product design, packaging, and the nutritional
value.
A health
commit
ment
• Customers are consciously making a smart choice
by purchasing Jamba Juice. It will offer health
benefits, and encourage customers to stay active,
eat healthy, and have a positive mindset.
A trendy
spot
• Jamba Juice is a cool place to hangout. The
colorful indoor design and the friendly staff will
both offer a positive experience.
A sense
of status
• Jamba Juice makes customers feel good about
themselves. They are choosing Jamba Juice
because they can afford a premium and enjoy all
the benefits stated above.
5

6. Jamba Juice’s Niche
The New Mainstream Chinese Consumers
1
2
3
4
5
Domestically focused but upwardly mobile
No
disposable
income
Global Consumers
Locally focused with income
Percentage of Urban households by annual income in US Dollar
2010
82
2020
26.6%
CAGR
51% = 600 Million
10
7
Poor
< $6,000
6
3
Mass
$6,000 - $16,000
2
New Mainstream
$16,000 - $34,000
6
Affluent
> $34,000
The New Mainstream Chinese Consumers demands for Jamba
Where they live
% of consumers in
tier 1&2 cities
74%
What are they
looking for
Emotional benefits
23&
How they spend their
money
Willingness to pay a
premium
49%
Shanghai
Beijing
The new mainstream customers (Global consumers and upwardly mobile sectors) in China is
growing and will be willing to pay for the premium juice experience. Jamba juice differentiates itself
by creating a experience (emotional benefits). Customers pay for a premium for the relaxing, fun
environment while convincing themselves of a healthier lifestyle.
6

7. Increasing demand and competitive pressure drives
globalization in beverages
Cost Drivers (Low)
• Transportation of fruits, keeping them fresh
may be extremely costly in some areas
• Does not require additional technology
investments, leading to low costs
• Maintaining the quality of fruits or other ”raw
materials” may be costly in some markets
Market Drivers (High)
• Lifestyles of developed and emerging markets
are converging
• Consumption of healthy drinks increases
dramatically with the of disposable
• Income leading to high potential within high
GDP growth countries
• Fruits are available in most markets excluding
very dry or cold areas
Competition Drivers (High)
• Market saturation in Western markets drives
companies such as Jamba Juice to go global
• Emerging foreign markets are becoming key
battlefields for Western branded products
Government Drivers (Medium)
• Healthy drinks have no national importance
and therefore government barriers of entry
should not be high
• Varying health or food safety regulations may
make glozalization difficult
Growing Middle class in China is the next sweet stop.
Growth Imperative
Declining revenues in the United States
between 2010 and 2012 signal intensifying
competition and need to seek additional
growth elsewhere
• Increasing Chinese Juice consumption
(CAGR 12.3 % from 2007 to 2011) tells
about market potential
• The success of Western cafés such as
Starbucks tells that people in China are very
receptive to Western drinks
Knowledge Imperative
Entering China or other similar countries may
result in positive learning effects
• For example product adaptation in China
may result in products that help Jamba Juice
to compete in the home market and other
Asian markets
• By entering new emerging markets Jamba
Juice will be able to gain experience for
further expansion
Globalization of Competitors
Jamba Juice’s competitors, such as Smoothie King, are expanding to China
• The specialty drink industry for coffee shops and cafés is in high growth due to increasing urbanization
and disposable income.
• However, the market is very affluent and new taste preferences makes the market very unpredictable.
• An identified adoption of Western lifestyle towards more healthy consumption and small ‘going-outexperiences’ give rise to significant opportunities for Jamba Juice.
• This paired with low government barriers to open a café, makes China and Jamba Juice a perfect
match.
7

8. Jamba Juice faces strong competitive pressure
Porter’s Five Force suggests that the beverage industry has very low barrier to enter and many players, that
competitors can easily copy almost ANY competitive advantage.
Political
• Huge state-owned, enterprises
and fierce competitions,
Chinese own food regulation
• New super ministry in 2013 to
ensure the quality of food
New Entrants - High
• Very low entry barrier for
juice industry
• Low capital requirement
• No consumer switching cost
• No established brand in the
industry
Social
• Increasing urban population
and middle class, low juice
consumption
• Health-conscious Preference
of freshly squeezed juice with
live demonstration
Suppliers - Low
•
•
•
•
Fragmented source of supply
Strong internal competition
Low switching cost
Sensitive to unpredictable factors,
such as weather
Incumbent Rivals - Medium to High
Economic
• Increase in CPI and
Consumer Purchasing
Power
• High inflation and raw
material cost
Substitutes - High
• All the large beverage producers are
aiming to launch healthy juice
• Large number of individual juice
crafters established in food court and
farmers market
• Undifferentiated products and brand
names
• Large number of substitutes
available, such as condensed
juices, milk tea, soft drinks,
ice-cream
• Many small, local producers
can also squeeze fresh,
affordable juice
Buyers - Low to medium
Technology
• Small order quantity
• Individual consumers have low
bargaining power once if consumer
brand loyalty established
• Very price sensitive
• Internet and mobile
development as a marketing
channel
• Labor intensive
• Expensive freezing and
storage facility
PEST analysis supports the low entry barrier result with no significant political or technology barrier. The
key challenge for Jamba Juice is to create a demand of juice in the traditional Chinese diet and convey the
experience rather than the beverage itself to consumers.
Key T
akeaways
• The specialty drink industry for coffee shops and cafés is in high growth due to increasing urbanization
and disposable income.
• However, the market is very affluent and new taste preferences makes the market very unpredictable.
• An identified adoption of Western lifestyle towards more healthy consumption and small ‘going-outexperiences’ give rise to significant opportunities for Jamba Juice.
• This paired with low government barriers to open a café, makes China and Jamba Juice a perfect match.
8

9. The Greatest Challenge: Low Juice Consumption in China
Culture
• Chinese youth
consumers in the
urban areas are
becoming more
Westernized in their
consumption
• Higher income and
more leisure time
increase the need for
more than basic
product needs
• Chinese consumers do
not drink juice, but
have adopted coffee in
a similar way as US
consumers consume it
Administrative
Geographic
• China’s entry in WTO
• China is the world’s
have lead to lowering of
largest country in
barriers to entry for
terms of population
foreign companies
with over 1 billion
• The Chinese government • Hard institutional
has two layers, national
void lacking in form
state government and
of underdeveloped
regional government
roads and railways
• China is ranked as
• Significant
number 91 in ‘Ease to of
difference among
Doing Business in’ by
areas and regions
The World Bank
within China, North
• The regional government
and South, Coast
is exercising protectionist
and center, rural
measure against foreign
and urban
businesses
• US consumer often
•
purchase ‘on-the-go’
beverages
• Especially healthy specialty •
drinks such as frozen
yoghurt, juice and
•
smoothies are experiencing
growth
• US consumers purchase
Jamba Juice products due •
to busy work schedule and
social leisure time
experience
• Jamba Juice satisfy a need
for self realization of a
healthier lifestyle through
its brand and products
The US embraces
competition and
entrepreneurship
Significantly lower
corruption rate
Minimum
government
intervention in
business activities
More transparent
regarding taxes and
legislation
• High developed
infrastructure
• High quality of fruits,
vegetables
• High developed
communication and
technology relations
Economic
• Slowing, but still
growing economy
with approx. 7-9%
GDP growth
• Huge rising middle
class due to increase
income level
• High Gini-coefficient,
hence big different
between rural and
urban areas, center
and coastal
• Affluent consumers
• Increased consumer
spending and
expectations to the
future
• Still the largest
economy of the
world
• Significantly higher
income and wage
level than China
• Slowing economy
with big problems
• Increased
unemployment rate
• Lower expectations
to consumer
spending
Distance
The CAGE distance is relatively high between the US home market and China. The most significant
9
challenge is the cultural distance of making Chinese consumers want and drink juice.

10. Doing Business in China is Challenging, but Feasible
Standard Institutional Voids
Hard infrastructure
Soft Infrastructure
•
•
Logistics: The cold chains in Chinese logistics
are extremely underdeveloped in comparison
with their Western counterparts, making
Jamba Juice unable to replicate their US
distribution center and fruit sourcing structure.
Legal system: The lack of food industry and
agriculture regulation makes the Chinese
business prone to problems related to low fruit
quality.
•
•
•
Roads and railroads: Underdeveloped
road and railroad networks increase
transport times and increase the
importance of a well functioning cold
chain.
Intellectual property: The lack of
intellectual property rights enforcement
increases the importance of differentiating
the franchise stores from imitators by
cleanliness and feel.
Political
voids:
Corruption
and
multilayered political structure creates the
need for contracting or strategic alliance as
an entry method.
Country Factor Endowments
•
•
•
Land: In case of contractual or alliance entry,
agricultural or real estate regulation for
foreigners do not affect Jamba Juice.
Labor: Jamba Juice will encounter low-cost
labor in China, but has to consider how to
teach about the importance of freshness and
cleanliness to its employees.
Partner: In case of a contractual or alliance
entry, finding a partner that can adapt to Jamba
Juices values may be time consuming and
costly.
The greatest challenge for Jamba Juice is to build a strong brand that conveys health and fun, while
balancing the brand premium and an affordable price due to the general lower income in China. As
the infrastructure in China is still developing, Jamba Juice should penetrate Tier 1 cities first, as they
have the most developed distribution system.
10

11. Jamba Juice’s Penetration as a healthy commitment, a
convenient choice, and an incomparable experience
The role of juice in four meals
Breakfast
Lunch
Snack
Dinner
• Popular choice at
the start of the day
• Boost vitamin and
nutritional needs
• Convenience
“Grab n Go”
• An option rather
than a necessity
• Convenience and
store display boost
sales due to the
colorful presence
• Ritualized,
particularly
conductive to high
customer loyalty
• A healthier
alternative to
crackers and chips
• Only high
customer loyalty
would choose
juice over
alcoholic drinks
and tea
Substitutes and competitors in the traditional Chinese diet
Coffee, Milk, tea
Coffee, tea, soft drinks
Traditional drinks
(boba), snacks, coffee
Alcoholic drink, tea,
soft drinks
Jamba Splashes onto Chinese Taste buds
• Close to premium office •
and school location
• Fast Grab n Go service but
•
sit-down option available
• Emphasis on the health
benefits (vitamin and
•
energy)
• Price advantage over
coffee, promotion
• Fun and colorful package
design
High presence with set •
•
meal
A juice after meal will help
relieve the saltines and
•
improve metabolism
•
A healthier alternative than
soft drinks
Serve as a healthy snack • Very Hard to
A place for people to
compete with
hang out and retraditional drinks,
energize
but promotion could
Place to study and work
work
Encourage to stay longer • Partner with local
food courts
Although Juice doesn’t have a dominant presence in the traditional Chinese dietary like tea, Jamba Juice can
create the demand by emphasizing the occasion, health components, and emotional benefits. The fact that
Chinese don’t drink too much juice gives Jamba the freedom and opportunity to define the juice experience.
11

13. Jamba Juice’s Key Strategic Advantages are Brand,
Customer Service, and Product Innovation
Higher
price
Brand
Service
Standardized
stores
Marketing
Own
stores
Franchis
es
Strategic Advantage
Strategic Target
Consumptio
n
frequency
Franchise
Training
Development
and
Monitoring
Reinvestment
Differentiation Cost Leadership
Focus
Loyal
customers
Profit
Centralized
distribution
and
supply
Increased
margins
Lower
operating
cost
• Company goal: “Top of Mind Healthy Beverage & Food
Brand”
• Target middle-high class with disposable income averaging
16-30 in age
• Consumers are loyal and purchase on a weekly routine
• Offer premium quality ingredients and flavorful, better-for-you
food products
• No high fructose corn syrup, artificial preservatives, or
artificial flavors
• Fresh-squeezed, on-the-spot
• High quality customer service, superior store experience
• JUICE plan provides extra cash and vacation bonuses
for employees based on store profit and service score
• Comprehensive franchise support including: 6 week training
program, volume discounts from established vendors, regional
franchise managers
Jamba Juice has developed a signature healthy brand based on its high quality product and
outstanding customer service in an energetic store environment, attracting a group of targeted,
loyal consumers who purchase repeatedly and are willing to pay a premium. These competitive
advantages along with strong franchisee support can be translated to expansion into China.
13

14. Jamba Juice should focus on its downstream
activities when entering China
1
2
Vegetables, fruit and
other ingredients
•
Jamba Juice
has two
supplier and
distribution
alliances with
SYGMA and
System
Services of
America
•
•
3
Franchise
management
and training
R&D
•
Jamba Juice’s
R&D activity
focus on
developing
new eco
products and
seasonal tastes
4
•
•
Jamba Juice
provide inhouse 6 weeks
intensive
training
The
franchisees
receive
continues
support in
marketing, sale
and training
5
Marketing and
Branding
•
Jamba Juice’s
•
marketing and
branding is
controlled and
developed
from the
management
and
implemented
through all the
stores
Customer and
store Service
Jamba Juice
ensure
through
training of the
franchisees
that customer
experience
and service a
core value for
Jamba Juice’s
product
Analyzing Jamba Juice internal situation suggest that Jamba Juice, does not have the capital required
to enter China based on greenfield.
At the same time the Jamba Juice’s value adding activities exists in the downstream activities, which
suggest that Jamba should focus on what they are good at:
1. Branding and monitoring
2. Well-developed franchise concept
3. That give consumer high service experience
Taco Stand Question: “What
is Jamba Juice’s good at?”
Answer: Recipe of a customer
experience
14

15. Lessons of “Sell The Ultimate Experience” from
Starbucks and Haagen-Dazs
Starbucks: It’s not about Coffee, it’s the experience
Three
Concepts
Starbuck’s
Strategy
Lessons
for
Jamba
Juice
Think Different
IMAGE
Introduce a Western Coffee experience
rather than an alternative of tea; “where
people could meet their friends”
Introduce a Global Juice experience,
where people can relax, drink healthy,
and have fun for all occasions
Position Smart
LIFESTYLE
Adaption: Green Tea and Red Bean
flavor
Physical presence instead of media
promotion
Extremely qualified labor force
Adapt to local flavors
Source with the highest quality
ingredients; Hire friendly, professionals
for the best customer experiences
Brand Global
STATUS
Extensive customer tasting profile,
Consistent Quality
Opened the first store in the airport in
Korea
Actively engage in market research
before opening new stores
High-qualify food and services
Carefully choose locations with sufficient
brand recognition from foreign demand
and emphasis the global presence
Haagen-Dazs: It’s not an ice-cream cone, it’s the occasion
Premium Position
China’s Hunger for premium
goods, increased buying power
and willingness to display wealth
“What Rolls-Royce is to cars and
Cartier is to jewelry, Haagen-Dazs
is to ice-cream”
Jamba Juice will satisfy Chinese’s
eagerness to commit to a healthy
lifestyle and personality expression.
Going to Jamba Juice indicates that you
are making a smart choice for yourself
and relaxing with your friends
Exotic Products with
appropriate local
adaptions
Haagen-Dazs maintains all the
classic, premium favor while
introducing moon cakes
Jamba Juice should introduce most of
the feature products to China with
minimum adaption such as soy milk
and tea drinks
15
Jamba Juice: It’s not the juice, it’s the experience AND the occasion

16. Jamba Juice’s Strategy to tackle China
•
Global
TransNational
Global Efficiency
•
•
International
MultiDomestic
•
Pushing a franchisee-oriented initiative with
local partners to move away from companyowned locations and leverage regional
expertise
When Jamba travels across borders, it does
not change its business model
Need for fresh raw materials means that
scaling efficiencies is not as important as
establishing a strong distribution network
Must use their expertise in product and
customer service to gain market share and
build a brand in China
Benefits from national
responsiveness
Aggregation
Adaptation
Arbitrage
Aggregation?
Because of the short life-span of raw materials, aggregation is unlikely with a
dispersed network of local suppliers
Adaptation? Besides basic changes in regional flavors and tastes, the increasing demand for
healthy drinks in China as proven by other competitors gives Jamba Juice confidence to replicate
its business model.
Arbitrage? Jamba Juice is able to leverage its brand and demand a premium price for its
smoothies while taking advantage of low labor costs in China.
In partnering with local distributors and franchisers, Jamba Juice should pursue an international strategy
that focuses on replicating the Jamba business model in China with minor adjustments for taste and
flavors. Economies of scale and global efficiency are difficult to obtain with the volume and nature of
fresh fruit product. Jamba is looking to transfer the concept of Western healthy beverage and food to
16
China with little adaptation.

17. Jamba Juice should exploit location advantages mixed with
cost efficiency
• Low labor costs in
China
• Higher willingness to
pay for branded goods
relative to income level
• With the experience of entering South
Korea with similar market condition and
target group, Jamba can achieve lower
cost from economies of replication
• By expanding to
China Jamba
Juice, can learn
about the affluent
consumer
behavior and
adapt
• Franchising allow
Jamba Juice to create
better relationship to
the government and
ease their penetration
into the Chinese
market
• Potential political
risks nullified by
partnership with
SPC & RBT
• Expanded product line maximizes
utilization of resources, lowers total costs,
and shares R&D
In order for Jamba Juice to create a global advantage in China, they have to
emphasize location drivers like national differences, global learning, and global
leverage while also taking advantage of economies of scope to spread costs and
R&D over a continuously innovative product line.
17

19. Jamba Juice Should Enter China through
Franchising in Tier 1 Cities
US is
experiencing a
stagnant growth
in the beverage
retail specialties
market.
Jamba Juice has
already opened
several stores in
Philippines and
South Korea.
China has the
fastest growing
middle class with
disposable
income.
Licensing/
Franchise
Joint Venture
China
Acquisition
Asia
Japan
Greenfield
Europe
Southeast Asia
Global
Jamba Juice
Working with an
established partner
in China would
mitigate the
institutional voids
and requires less
capital.
North America
Local
South America
Entry Modes
Weight
Criteria
Export
Franchising
Tier 1 Cities:
Shanghai,
Beijing, and
Hong Kong
JointVenture
Acquisition
Jamba Juice
should target
consumers in
Tier 1 cities
that are more
inclined to
foreign brands
and have
disposable
income to
purchase
healthy
smoothies.
Greenfield
Cost of
Entry
Control
Local
market
knowledge
Time of
entry
19

20. Find the Right Partner
SPC is the Winner in China
Competencies
Both SPC and Rbt
are established,
professional
franchisers with
proven successes in
China.
Local
Knowledge
Rbt is run by local
businessman, Albert
Wu. While SPC is
from Korea, Rbt has
slightly better local
knowledge.
Penetration
Speed
Existing
Relationship
Rbt has proven success
with HappyLemon,
which aimed for 1,200
stores in the next five
years.
While Paris Baguette
by SPC is much slower
in comparison.
SPC has been
successful
running Jamba
Juice in Korea.
Huge Plus.
Cannibalization
Risk
Happy Lemon sells
lemon flavored
teas, an indirect
competitor; While
SPC mostly owns
bakeries.
Franchising is the fastest way to gain high growth and visibility, while keep low cost
SWOT Analysis with SPC
Strength
Weakness
•
• Conservative penetration rate
• Face strong competitive
pressure from local businesses
•
•
Established relationship in
South Korea
Understanding of Jamba
Juice’s culture and goal
Over 10 years experience in
China
Opportunity
Threat
• Achieve synergy in both South
Korea and China, Cooperation
with existing bakery franchises
• Subject to foreign business
regulations
• Distracted by the growth of 20
other brands

21. Jamba Juice’s Success in South Korea
2. Positioning
3. Present
•
Partnered with SPC Group, one of the most well-know food
franchising companies in Korea with over 4,500 lcoations in
operation
•
Jumper Juice, also called Jambaism, or Jumper wit is an expression to
live life full of fun and wit. Jumper wit is always positive and
overflows.
•
Product: Classic Smoothies: Strawberries Wild, Mango-a-go-go, and
Caribbean passion. But also adjust to local Asian taste: Matcha Green
Tea Blast, Jeju Tangerine Juice. Koreans consume twice as many Jeju
tangerines as they consumer apples due to they were long used for
herbal medicines.
Location: Opened first store in Incheon International Airport to
reach diverse consumers traveling to and from South Korea
•
1. Partnership
Tae-kwan Park, South Korea’s Olympic swimmer is the
spokesperson for Jamba Juice South Korea to portray his healthy,
energetic and outgoing lifestyle
•
Jamba Juice has opened 5 stores in the past 5 months in Korea.
Open 200 locations with SPC in the next two years.
4. Promote
5. Penetrate
Three pillars to replicate the success in China
Partnership
Penetrate
Present
Store
experiences
+
Location
Beijing + Shanghai
SPC and Rbt are both experienced
franchisers in China. Jamba Juice
can quickly establish brand
visibility. Given the relationship in
Korea, SPC will be a good partner.
Through franchising, Jamba
Juice will adopt a fast expansion
plan of physical store locations
in expat heavy locations of
Beijing and Shanghai.
Customers will have a fun,
relaxing experience at Jamba
Juice’s colorful physical store,
while enjoying a premium
21
healthy juice with friends.

22. Franchise Risk Mitigation built into growth business model
Vendors
Jamba sources and
contracts globally to ensure
the right ingredients are
delivered at the right
prices.
Potential fruit vendors with
reliable history and prices
includes Yiguo.com as well
as other local vendors, to
ensure the best quality.
Risk
Franchiser strays from
Jamba Juice’s company
culture/ appearance
Disagreement with
Franchiser and HQ.
Government
intervention
Increased competition
from global competitors
Price sensitivity is
greater than brand and
premium pricing
strategy may not be
successful.
Training
Jamba trains on how to
manage a Jamba Juice unit
Trains the team so that to
ensure a successful
opening
Probability and
Severity
Low
Low
Low
High
Medium
High
Operations
The Region Franchise
Manager will visit regularly
to ensure that Jamba is
meeting needs on an
ongoing basis.
Risk Mitigation
Have the region manager very clearly communicate the
importance of consistency. Relay the importance of
strong branding and everything that Jamba stands
behind. Communicate a clear termination agreement
if parties stray from mission, vision, and brand.
High
Address all cultural conflicts before entering the
agreement and write a contract listing out rewards and
punishments for each partner
High
Make sure to choose partner with good government
relations and contacts. Create clear standards and
protocol to ensure all business being done lawfully.
Medium
High
Use competitive advantages of standardization and
customer service to stay ahead and grow faster.
Consistent branding and integrated customer marketing
will ensure that Jamba stays ahead.
Either adjust pricing or invest in more marketing and
development of premium brand.
22

23. By fulfilling Chinese consumers’ two needs…
Tier 1 Consumers
Action
Locate franchise stores in busy areas close to other cafés and food courts
with added local Chinese drinks e.g. green tea and standard product range
Targeted
customers
‘New Mainstream’ – income: $16,000 – $34,000, 14 – 35 years, youth,
global consumers, health oriented lifestyle
On-the-run
Social experience
Consumers on the way to school
or job wanting something
refreshing and healthy, that reflect
their lifestyle and personality of
being modern and healthy
Consumers who want to socialize
and spend time with their friends
or family. Looking for a good
experience and nice atmosphere
Special Needs
…Jamba can enter a blue ocean in the specialty drink
market in China
6
5
4
Starbucks
Rank from High to
3
Low
Other specialty drink providers
Haagen-Dazs
2
Jamba Juice
1
Juice makers
Average of Industry Peers
0
Location
Affordability
Healthy
Service and
Experience
Parameters
This detailed ranking of the market landscape parameters, that companies in the specialty drinks industry
are competing on shows that Jamba Juice should avoid a Red Ocean on price and location. Instead price
23
and location should be mandatory competing factors and service and experience as blue ocean measures
to satisfy special needs for the target group.

24. Jamba Juice should sponsor events and
engage social media to attract customers
Pulling the Brand through Chinese appreciated channels.
Jamba
A “food” twitter with half a million
followers
Sponsorships
Jamba Juice can use
celebrities for TV
commercials to gain the
attention of the Chinese.
Also, due to the
popularity of Korean
culture, Jamba Juice can
arbitrage the culture.
Social Media:
Through Weibo,
Dianping.com and
Wechat, Jamba Juice
have the opportunity
to reach 597 million
potential consumers.
Sunflour Bakery
• 15% off baked
goods after 6pm
with a drama
show ticket
• Top Bakery in
Shanghai
Jamba
Juice in
China
Partnership
Jamba Juice can
partner with local
businesses, such as
movie theaters and
gyms to offer
discount with
purchase.
The Success of Banana Milk
• 1/3 of the entire Korea beverage
imports in five months = 17
Million Sales
• Popularity gained from k-pop–
after launching a Korean TV
commercial in China
Sporting Events
Through the rise in
Chinese interest for
sporting events,
Jamba Juice can
partner with popular
teams to push their
brand.
Sales Promotions
Jamba Juice can
offer “happy hour”
discount and sales
booth to incentivize
the Chinese
consumer to try the
products.
The market pulling for the needs to embrace not only
healthy drinks but a new culture.
Marketing the Brand Identity: The idea of focusing on a single advertising campaign message and
leveraging the cost throughout the different channels used, helps build a solid brand identity. Also,
marketing in this fashion mitigates the risk for franchisees to diverge in brand identity, therefore
maintaining a consistent image throughout China.
24

25. Getting the Chinese to Welcome Jamba Juice
With Jamba Juice’s marketing slowly convincing the Chinese consumers to adopt the western style drink,
Jamba will enter China with an alternative menu to familiarize and attract potential Chinese consumers.
Example of Jamba Juice adaptation in China
Western Style
Chinese Style
Aloha Pineapple
Smoothie
Ancient Logan Splash
Pomegranate
Paradise
Chinese T
aste
Kabosu Kumquat Blend
Mega Mango
Western T
aste
Lychee Blast Smoothie
Strawberry Whirl
Conversion
Green Tea and Fig Chill
The Ultimate Juice Experience in China
Existing Juiceries
Jamba Juice
Appeal to Chinese Consumers
Fixed Menu Item
Design Your Own Juice
DIY, Trust, Engagement
Food Court Location
Individual Stores and Food
Court with ample seats and
space
Added emotional benefits with friends and
families
Value of money -> Stay Longer
Limited Promotion
Available (Groupon)
Multi-channels of Promotion
(K-Pop arbitrage, In-store
demonstration, Partnership,
Sponsorship, and Social Media)
Words of mouth Trust (Social Media),
Immediate incentive to redeem the coupon
(Time limitation of partnership), Authority
(Celebrities effect)
It’s the Juice
It’s the Brand and the
Experience
Status and Lifestyle, Proof of Economic
Affluence
Domestic
Established Foreign Brand
Globalization and International
Compared to the traditional Juiceries present in food court, Jamba Juice not only
premium quality, freshly squeezed juice, but also the café experience with ample seating,
friendly services, ongoing promotion, celebrity support, the DIY experience, and the
sense of status. The goal is to appeal to the mainstream Chinese consumers, establish a
strong brand, and eventually transfer the brand to a direct experience.
25

27. Footprint to $50 Million in China in 5 Years
25
Projected 5 YR Revenue and Profit in China
$50
million
in
revenues
20
15
Million USD
10
Revenue
Operating Profit
5
Break
–even
point
0
2014
2015
2016
2017
2018
-5
-10
Year
We see that Jamba can expect to break even during the third full year of franchising in China, with
profits scaling exponentially as volume increases and fix costs are dispersed over high volume
production. The demand is present and growing rapidly there in the Chinese market, with the
healthy beverage market growing with the rise of the upper middle class. Jamba Juice can enter the
market with smaller initial capital investment via partnering with a local company.
27

28. Timeline for Implementation
2013
2014
2015
2016
2017
Partner with SPC
•
•
•
Contact and enhance
relationship with SPC
Group
Negotiate franchise
agreement
Exchange US and
China employees to
learn
Penetrate the new
mainstream
• Analyze the spending
habits of the new main
stream consumers
• Open stores in Beijing
and Shanghai
Present and Promote the
Jamba Juice Experience
• Promote Jamba Juice
through social media,
sponsorship, TV
advertising, and in store
experience
• Build the reputation
and brand presence
28

30. Appendix
Jamba Juice Avoiding Risk Through Franchising
Entry Strategy
Risk
Con
Pro
Franchise
Low
The Business
Model can be
altered to the
extent that Jamba
Juice loses its
competitive
advantage.
Jamba Juice would be
able to adapt quicker
and help establish its
brand name.
Joint Venture
Medium
A joint venture
may lead to a
misunderstanding
of company
identity, and lead
to a violation of
intellectual rights.
Jamba Juice would be
able to learn how other
companies function;
however, there is no
other company that
holds a high enough
market share for
Jamba to learn from in
China.
Green Field
High
Operating cost will
hinder Jamba Juice
from ever making
a profit since they
do not harvest
their ingredients.
Franchise is the
best strategy
“Jamba Juice is
good at create
an experience”
Jamba would be able
to be in more control
of the decisions it
makes in China, but
would still adhere to
the Chinese
government .
Franchising
In
China
1) With franchising, Jamba Juice exploits a
entry strategy that allows it to be locally
responsive by its management, and as Chinese
Franchisees open more Jamba Juices, the brand
identity becomes strong.
Volume
2 Reasons Jamba Juice Needs to Franchise in China
L
2) Through franchising, Jamba Juice can replicate its
Business model, therefore gain economies of scale
with aggregation.
Low
High
Local
Responsiveness
30

31. Appendix: Jamba has proven the popularity in
middle class in United States and South Korea
United
States
1
2
3
4
In
the
US,
tiers
1,2,
and
3
are
able
to
consume
Jamba
Juice
because
income
is
still
disposable.
However,
only
tiers
1
and
2,
embody
Jamba
Juice’s
routine
and
loyal
consumers.
5
South
Korea
1
2
3
4
If
Jamba
entered
China
1
2
3
4
5
In
South
Korea,
Jamba
Juice
consumers
are
in
tiers
1
and
2.These
consumers
are
high
income
earners
and
young
professionals;
they
are
part
of
the
new
generation
of
global
consumers.
In
China,
there
is
a
booming
urban
population
and
rapidly
growing
middle
class.
Growing
amount
of
people
with
disposable
incomes.
Jamba
Juice
should
target
Tier
1
&
2
for
early
entry
and
then
if
successful,
to
expand
market
share,
grow
to
Tier
3.
Analyzing
the
different
segments
of
the
market
pyramid,
a
key
variable
in
Jamba
Juice’s
entrance
to
China
is
to
locate
stores
in
strategic
cities
and
areas
that
Chinese
people
with
disposable
income.
Domestically
focused
but
upwardly
mobile
No
disposable
income
1
2
3
4
5
Global
Consumers
Locally
focused
with
income
1)
Jamba
Juice
can
enter
an
approximate
18
Tier
1
cities
in
China
with
an
estimated
population
of
over
200
million
potential
consumers
who
have
high
disposable
income
to
become
routine
Jamba
Juice
consumers.
2)
Jamba
Juice
can
also
enter
25
Tier
2
cities
that
accounts
for
54%
of
China’
economic
growth
and
the
backbone
for
the
“Rise
of
China.”
These
25
tier
2
cities
encompass
a
104,000,000
population
for
Jamba
Juice
to
serve.
3)
There
are
also
24
Tier
3
cities
that
are
locally
focus,
but
with
disposable
income.
This
emerging
tier
provides
major
opportunities
for
Jamba
to
expand
its
targeted
consumers.
• Jamba
Juice
should
target
Tier
1
in
the
short
run
and
expand
its
stores
to
Tier
2
and
3
cities
after
having
established
a
strong
brand
and
foothold
in
the
opinion
leaders
consumption
behavior
in
Tier
1
cities.
• This
will
create
a
domino
effect
and
release
the
most
powerful
measure
to
create
trust
in
Jamba
Juice
brand
for
Chinese
consumers
–
‘word-­‐of-­‐mouth’.
This
affect
will
allow
Jamba
Juice
to
focus
on
their
core
competences
by
giving
high
quality
experience,
while
the
satisfied
consumers
will
31
automatically
take
their
friends
and
relatives
with
them
into
the
stores

32. Footprints to $50 Million in China in 5 Years
Break Even Analysis ($)
2014
2015
2016
2017
2018
Fixed Cost ($ million)
$2
$3.5
$5
$7.5
$9
Capital Investment ($ million)
$5
$4
$3
$2
$1
Variable cost ($/lb)
$2.00
$1.95
$1.90
$1.85
$1.80
Sell Price ($/lb)
$4.00
$4.10
$4.20
$4.30
$4.40
Contribution Margin ($/lb)
$2.00
$2.15
$2.30
$2.45
$2.60
Projected Volume (units)
1
3
5
7
9
Revenue ($ million)
$2
$6.45
$10.6
$17.15
$23.4
Operating Profit ($ million)
($5)
($1.05)
$2.6
$7.65
$13.4
Assumptions:
• Projected volumes are based on obtaining 4% market share of healthy beverage market by 2018,
a reachable goal with major competitors holding 4-7% market share
• Increasing volume is also based on a 10% CAGR for specialty beverage market in China
• Sell price was formulated based on industry average for specialized beverages (~$3/drink) with a
$1 premium for Jamba’s differentiated offering
• Increase in sell price accounts for projected higher demand in the future market
• Variable cost is roughly 50% of the price based on (CGS+Labor)/Revenue in US 2013
• Economies of replication result in decreased variable cost
• Highest initial capital investment comes in Year 1, then a decreasing amount of infrastructure
investments over the course of 5 years
• Fixed cost based on US operations and increasing incrementally with greater scale, matching
fixed cost to sales ratio of the US by 2018
32

33. Sources and Websites
•
Websites
•
http://jambajuice.co.kr/web/main.asp
•
http://www.qsrmagazine.com/news/jamba-juice-opens-store-south-korea
•
http://www.businesswire.com/news/home/20110616005786/en
•
http://www.thestreet.com/story/10989666/1/jamba-juice-and-spc-group-celebrate-first-store-openingin-south-korea.html
•
http://www.koreatimes.co.kr/www/news/biz/2013/02/123_130653.html
•
http://www.chinabevnews.com/2013/09/china-to-become-no-2-market-for.html
•
http://businesstoday.intoday.in/story/case-study-haagen-dazs-in-china/1/184779.html
•
Reports
•
McKinsey
–
–
•
Meet the 2020 Chinese Consumer
Annual Report of Chinese Consumers 2012
ISI Emerging Markets
–
–
•
Street Stalls and Kiosks in China
Tea in China
Passport
–
–
•
Fruit/Vegetable Juice in China
Beverages in Consumer FoodService: The Best Portfolio Wins
PWC
–
Doing Business in China
33