Branding plan for Baijiu - Chinese Wine in USA

2. BRAND DETAILS
• NAME OF BRAND IS REDSTAR ERGOUTOU: ERGOUTOU IS TYPE OF BAI JIU LITERALLY MEANING TWICE
DISTILLED – PROCESS WISE. REDSTAR IS ONE OF THE BIGGEST PRODUCER OF THIS TYPE OF BAIJIU
(CHINESE WHITE WINE)
• TARGET MARKET IS CHINESE EXPATS IN SAN FRANCISCO, MAINLY IN CHINATOWN

3. EXECUTIVE SUMMARY
•
•
•
•
THE STRATEGIC PROBLEM IS EXPAT CHINESE ARE AWARE OF THE BRAND BUT NOT AWARE OF THE AVAILABILITY OF THE
BRAND OVERSEAS. THERE IS LOTS OF OPPORTUNITY OUT SIDE CHINA AS CHINESE POPULATION IS INCREASING OUTSIDE
CHINA
THIS OPPORTUNITY ARISE BECAUSE REDSTAR CORPORATION DECIDED TO GO ABROAD TO TARGET THIS MARKET BY
REDEFINING THEIR VISION BUT MARKETING DEPARTMENT IS FAILING TO TAKE THIS OUT OF CHINA DUE TO
REGULARIZATION AND WEAK DISTRIBUTION CHANNEL OUTSIDE CHINA
THE STRATEGIC ALTERNATIVES ARE TO STAY AS IS OR TO GO WITH THE NEW MARKET
THE RECOMMENDATION IS TO GO ABROAD AND START WITH CHINA TOWN IN SAN FRANCISCO, EVEN IF WITH
CONSERVATIVE MARKET ASSUMPTION IT HAS A POTENTIAL OF THE $1.4M PROFIT ONLY IN ONE YEAR.

4. MARKET ATTRACTIVENESS
Power of Supplier
•
•
THE WESTERNIZATION IS
CAUSING PEOPLE TO HAVE
OTHER SPIRITS LIKE VODKA,
WISKY THAN THEIR TRADITIONAL
WINE
PRICE IS ONE OF THE KEY FACTOR
THAT INFLUENCES THE CHOICE
OF THE CUSTOMER
• Supply chain
plays the key role
in distributing the
products in
foreign countries
Threat of
Substitutes
• Westernization
causing Chinese
people to
consume other
spirits
Medium
Entry Barriers
Rivalry
High
• Competition is
Based is
Awareness, price
and quality
High
Power of Buyers
• Income is still
low comparing to
Americans
Medium
• Regulations in
USA
• Import
regulations
High

5. COMPETITION
Relative Strength
•
•
WE ARE A LOW PRICE BRAND
AND ALWAYS CONSIDERED
AS WORKER’S BRAND
LOOKING AT THE NUMBER
OF CUSTOMERS THERE SEEM
TO BE HUGE OPPORTUNITY
TO START TO MAKE PROFIT
ON MARGIN
#2 brand in BaiJiu category
Low price, perceived as worker’s
brand
Well established distribution n/w
800 years of history
Threats
Import rules and regulations
Cost of import and placing the
product in market
Relative Weakness
No export experience
Distributors in USA
Awareness about availability
Opportunity
San Francisco has 0.6M Chinese
population
China town in SF has 0.3M Chinese
population

6. OTHER PLAYERS IN FIELD
•
•
•
THERE ARE MANY OTHER
PRODUCTS WITH ALMOST
SAME ALCOHOL
CONTENT(40%-55%) ARE
HAVING SAME QUALITY
Qualit
y
HIG
H
Moutai
Whiskey
Red Star
MOUTAI IS PREMIUM
BAIJIU
Wine
Vodka
RED STAR CAN BE PLACED
AS HIGH QUALITY BUT
CHEAPER PRICED
Rice Wine
Price
LOW
HIG
H

7. CONSUMER PERCEPTION
Functional: Social drink,
Functional: Social drink,
Post business meetings,
Cultural celebrations,
Low price High quality
Post business meetings,
Cultural celebrations,
Low price High quality
Red Star’s Current
perception in China
Red Star will be
perceived in USA
Emotions: Rich History,
Going back to the roots
Experience: Exotic Culture
Authentic culture Emotions: Rich History,
Going back to the roots
Experience: Exotic Cu
Authentic culture

8. CENTERS OF INFLUENCE
•
•
•
DISTRIBUTORS: IN USA PEOPLE MAINLY BUY FROM LIQUOR STORE OR GROCERY SORES SO POSITIONING OF THE
BRANDS IN THESE PLACES INFLUENCES THE CUSTOMER BUYING ABILITY
BARS TENDERS AND WAITERS: THERE ARE MANY BARS, RESTAURANT AND KARAOKE CENTERS IN AND AROUND CHINA
TOWN. CHINESE PEOPLE MAINLY HANG OUT THESE PLACES. SO THE BAR TENDERS AND WAITERS ARE ANOTHER KEY
INFLUENCERS.
PARENTS: YOUNG GENERATION IN CHINA LEARN ABOUT THE CULTURE FROM THEIR PARENTS. SO THEY ARE ALSO PART
OF INFLUENCERS AS DRINKING BAIJIU WHILE EATING FOOD IS IN THE CHINESE CULTURE.

9. WHAT IS RED STAR
•
•
•
•
VISION: VISION OF RED STAR TO BRING IN MORE PRODUCTS AND SPREAD THE HERITAGE
OBJECTIVE: TECHNOLOGICAL INNOVATION, MARKETING INNOVATION TO BRING IN NEW PRODUCTS AND SPREAD
ACROSS THE WORLD
GOALS: TO DISTRIBUTE THE PRODUCTS ACROSS THE WORLD TO SPREAD THE TRADITION AND IMPROVE CUSTOMER
BASE
PS: THERE IS NO CLEAR INDICATION IN THEIR CHINESE WEBSITE, THESE ARE TRANSLATED FROM THEIR PROFILE PAGE.

10. STRATEGIC ALTERNATIVES
Stay As is
Save
$20000
0 cost
0
Revenu
e
Red Star Ergou tou
Go for the
Market
$20000
0 Cost
$1.4M
profit
with
small
market

11. STRATEGIC ALTERNATIVES
Stay as Is
Export products in
SF starting with
Chinatown
• Pros: Saving of Cost, Administrative expenses and
marketing expenses, No hurdle with import facilities with
USA
• Cons: Loosing out on the huge market of about 0.3 million
people, eventually on revenue of around $1.4M (Exhibit 1),
Not aligning with Vision statement
• Pros: It’s a good opportunity to make people aware about
the availability of the brand, capture market and earn more
revenue, achieve the goal
• Cons: Cost of export is more, the process of finding and
setting up distributors is challenging being in country like
USA, Need to follow the rules and regulation

12. RECOMMONDATION
•
•
•
•
Fine quality products at
cheaper rates
MY RECOMMENDATION TO REDSTAR IS TO INVEST IN
MARKETING AND EXPORT AND GO ABROAD
THERE IS A HUGE MARKET AVAILABLE IN THE USA AS
USA HAS HUGE POPULATION OF CHINESE EXPATS. IN SF
ITSELF THEY ARE AROUND 20%.
THEY CAN INVEST IN $2000000 AMOUNT OF MONEY
FOR IMPROVISING SUPPLY CHAIN AND MARKETING
PURPOSE AND WITH FOLLOWING STRATEGY THEY CAN
POSITION THEMSELVES IN THE MARKET
THEY CAN EARN REVENUE OF AROUND $1.4M ONLY IN
CHINA TOWN CONSIDERING INDUSTRY AVERAGE
CONSUMPTION RATE PER ADULT PER YEAR
Make products
easily available to
the customer
through different
channels
Create customer
relationship by
arranging events

13. TACTICAL PLAN
SOLUTION:
•
•
•
Red Star ergoutou production facility
THEY ARE WELL SPREADED
ACROSS CHINA, CAN USE THIRD
PARTY PARTNERS WHO HAS
KNOWLEDGE OF EXPORTS TO USA
Third party supply chain management
TRANSPORTATION TO BE DONE BY
WATER TO SAVE THE COST AND
EXPORT HUGE QUANTITY TO
SATISFY DEMANDS
IDENTIFY STRONG DISTRIBUTORS
WHO KNOWS THE MARKET WELL,
HIRE AND INCENTIVIZE LOCAL
WHOLESALERS AND
DISTRIBUTORS
West coast wholesalers
Liquor
Store
Bars,
Karaoke
Restaur
ants
Super
markets

14. BRANDING
Product: Better quality, Cheaper, Chinese
working class spirit, rich in history
Emotional: reminds to Chinese cultural roots,
feels like home.
25-55 year old Chinese
male & females
Functional: Post business meetings, social
events, celebrations
Experience: Exotic, Authentic, Strong, Ritual,
Cultural traditional, communal
We will promote the products as an experience and connection with the heritage culture.
Red star can implement their entertainment by event strategy in USA also by arranging events in Chinese new year

15. INCENTIVES
•
•
•
•
WE NEED TO INCENTIVIZE ALL THE INFLUENCERS OF THE MARKET.
BAR TENDERS: INCENTIVIZE BAR TENDERS WORKING IN BARS, KARAOKE IN CHINA TOWN, TO PROMOTE OUR PRODUCTS
TO CHINESE PEOPLE, HIRE RELATIONSHIP MANAGERS TO CHECK THE CUSTOMER RESPONSE AND POSITIONING
PRODUCTS IN THE BAR
DISTRIBUTORS: POSITION THE PRODUCTS IN THE STORES SO THAT THEY ARE EASILY VISIBLE OR CATCH THE EYE
PARENTS: REMIND THEM ABOUT THE VALUES AND TRADITION OF CHINA THROUGH ARRANGING SOME CULTURAL
EVENTS SPONSORED AND HOSTED BY REDSTAR

16. VALUE AND ACCESS
• By bringing their bai jiu in
their home which away from
their native we are spreading
the culture
• It feels like home away from
home
• Keeping the traditions and
culture alive even while living
in other countries
• A nice opportunity for
foreigners to learn more
about the culture
Bars/ Karaoke
•
•
•
Compete with other
baijiu and foreign
brands
Karaoke is
traditional place for
Chinese to hangout
One of the most
crowded place and
well perceived by
Americans also
Liquor and local
Stores
Restaurants
•
•
•
•
Baijiu is meant to
drink with the food
while in
restaurants
Good place to serve
the baijiu as a
traditional drink
Number of
restaurants are
increasing with the
Chinese population
Americans are also
trying different
cuisines
•
•
•
Normally in USA all
products are
accessible through
these stores
Make it available in
different size of
packaging like
150ml, 250ml etc.
Incentivize store
owners to spread
word of mouth
about availability

17. DISTRIBUTION AND PACKAGING
Distribution
Change the color of bottle
to transparent white to
compete with foreign
brands
Change the seal to
standard, Logo
trademark and quality
certificate
Bars
karaoke
Liquor stores
Super markets

18. ADVERTISING BUDGET
I recommend to spend
minimum $200000
USD divided equally
into two sections
1) For improvising
distribution and
implementing the
export facility
2) Advertisement
Advertisement budget
will be divided as
follows

19. THANK YOU

20. EXHIBIT 1
Profit potential depending on the individual bottle sell
Bottle
150ml
500ml
750ml
Price in
US
D
Price in Retailers Price to Promotiona
tar's Margin
Promotion Red S
RMB Margin % Retailers l Margin %
$4-$5
21-26 CNY
33%
13-16 CNY
10%
11-13 CNY
51%
8-9 CNY
$10-$12
61-66 CNY
45%
40-45 CNY
10%
37-41 CNY
54%
23-28 CNY
$15-$17
91-96 CNY
58%
55-60 CNY
10%
50-55 CNY
60%
32-35 CNY
Total initial
investment
Net Profit
earned
Profit potential for first year
average
consumptio
n of the
spirits per
Average
adult per margin per
year
litre
6000ml
$3 $
Profit per
adult
18
Chinese
assuming
population
adults
in China
consuming
Town
baijiu as 30%
300000
90000 $
Total profit
earned per
year
1,620,000 $
200,000 $
1,420,000