Hong Kong FMCG Market

Hong Kong FMCG Market

Marketing
The core text is:
Kotler, P. & Armstrong, G. (2012), Principles of Marketing, 14th Edition, Harlow, Pearson Education.
Supplement:
Blythe, J., Essentials of Marketing Third Edition, FT Prentice Hall
Fahy, J. & Jobber, D., Foundations of Marketing, McGraw Hill.
Assignment Title:
Hong Kong FMCG Market
Analysis & Product Development
Background
The intention of the assignment is for you to critically analyse the Hong Kong FMCG Market, identify the different segments for a product category and develop a product aimed at one segment of that market.
Tasks
The word limit is 2,500 excluding appendices, but including any quotes. It is essential that marketing theory is linked to practical application in this assignment.
The three parts of this assignment to be completed by you are presented below:

1. External analysis 40%: Conduct an external analysis any product category of the current Hong FMCG Market:

• Define the market
• Examine the marketing environment
• Conduct a competitive analysis
• Conduct a customer analysis (this should include primary data collection).

1. Market segmentation 20%: From your external analysis of the product category of the Hong FMCG Market identify the different segments that exist (remember to include marketing theory).
   Examples of product categories in the FMCG Market
2. New Product Development and
   Positioning 40%: Position a new FMCG product in a particular segment of the
   market identified above. Clearly describe this market and the position you
   hope to achieve in the minds of the customers. In other words, present a
   positioning statement. Discuss the 4p’s you would adopt to achieve your desired
   position in this FMCG market. Please include mockups of the product, branding,
   products, promotions campaigns, and even a brochure or advertisement if you like.
   Assessment criteria
   Criteria used to assess the assignment include: Evidence of understanding of relevant marketing management concepts. Clear and realistic answers to the above questions. Ability to apply concepts in a clear and informative way. Quality and originality of ideas presented. Ability to present an argument to support your view. Clarity of written expression (well structured & logical flow of ideas. Attention to grammar). Professional standard of presentation (high-quality layout. Careful checking for spelling mistakes and typos). Referencing wherever appropriate. Creativity in the design of your new product.
   Generic Skills
   There are four important generic themes that we will be looking for in your assignments; these included: ment. collection and analysis.
   Grading criteria
   1 Internet and personal interviews. outstanding exploration of the topic with excellent integration of a wide range of material. the relevant areas.
   2:1 Internet and personal interviews. cal comment and synthesis of a range of issues.
   2:2 nd personal interviews. recommendations. areas.
   3 . recommendations. areas.
   FL(Fail) arch conducted.

Introduction

Fast-moving consumer goods sector forms a great part of the global economy. The sector involves companies and manufacturers of retail products with short shelf lives. The products have high turnover rate and mostly deteriorate rapidly. According to Thain and Bradley (2015), the industry involves accompanies that make products mostly found in retail stores, supermarkets, and shops. These products include personal care, household care, packaged and branded foods and beverages, and spirits, alcohol, and tobacco among other products. The success and failure of FMCG companies is greatly influenced by the efficiency and effectiveness of the marketing strategies. The sector, according to Gough (2014), has the longest and greatest marketing history and well-articulated function of business. The analysis of the sector offers extensive knowledge of marketing, its processes, and disciplines. Hong Kong is an attractive market for FMCG. This essay offers an in-depth and critical analysis of the FMCG market of Hong Kong. It discusses the different segments in FMCG and outlines and discusses introduction of a beverage into the FMCG market of Hong Kong.   

External Analysis and Market Segmentation

The Hong Kong FMCG market involves all companies that deal with products with short shelf life or which are consumed rapidly. The market ranges from producers of personal care products, household care products, or food and beverages of various brands. According to Gough (2014), the market forms a significant contribution to the diverse economy of Hong Kong. The economy of the State places it at an elevated ground as an investment/business hub. Hong Kong has a developed economy and imposes very low taxes for investments and labour (BMI Research, 2016). Additionally, the country records growing supply of flexible labour and cheap workforce and a large pool of increasingly expanding university and college educated labour force. These make the input required for efficient running of companies easily available and relatively cheap. The presence of highly skilled labour and effective supply systems pose greater benefits for investors in the State. Most importantly, Hong Kong has a highly developed transport and communication network and an efficient infrastructure in general, diverse demographics, culture, and its appeal as a tourist destination and a business hub makes it an ideal market. Most importantly, Hong Kong is a leading global financial centre operating under a capitalist economy with free trade and low taxation (Leng, 2009). These aspects among others makes the State a critical market for nearly all products and services.   

The State poses minimal trade/investment and logistics risks due to its impressive foreign investment policy, its open and free economy, and the existence of a highly developed logistics network. These aspects make it ideal for foreign investment. Investing in the country means reduced costs owing to the transparency of its legal system, low rate of corruption, and low taxes and various financial incentives (BMI Research, 2016). The State also records significantly low crime rate. It records very minimal cases of violence, security threats, whether domestic or international, and thus continues to thrive as an investment hub.

The FMCG market in Hong Kong is mature and competitive. The market comprises of local and global companies all focusing on the achievement of greater market shares and the improvement of their profitability. Therefore, the market is increasingly competitive. The market for food and beverages and household care products remains constantly high. The market records a growing market demand growth for the food and beverages products including alcohol and tobacco from 4.6 to almost 5 percent per annum from 2011 to 2015. However, the market demand growth for personal care products such as soaps and cleansers among others continues to decrease for five years in a row. The market has recorded a decrease 8.6% market demand growth in 2011 to a growth of 3.0% in 2015 (PwC, 2016). Therefore, any company that wants to enter the FMCG market in Hong Kong should consider the food and beverages segment.  

The competitiveness of the market demands every company developing a new product to invest heavily in innovation. According to Thain and Bradley (2015), innovation is critical in the development of a competitive food and beverages product. The FMCG market in Hong Kong comprises of local and global players who have over the years achieved greater market shares. To compete effectively in such a market, a company must invest heavily in innovation. Innovation will allow the generation of avenues for improved sales and profitability. For instance, the food and beverages market demands a company that uses innovation to develop products that appeal to the market. The production of beverages that target areas that offer opportunities for growth such as brands that promote the health and wellness of the consumers would enhance competitiveness and profitability. A product targeting the food and beverages market in Hong Kong should mainly use natural ingredients, less sugar, and avoid artificial preservatives, and cholesterol and other components that influence the health and wellbeing of the customers negatively (PwC, 2016). 

Companies producing FMCG target the local and international market. Some of the largest companies in the State include Dah Chong Hong, EDO Trading Co., Four Seas Food Investment, Sun Shun Fuk, and Yuen Trading Company Ltd among others. Moreover, competitors in the market include foreign companies such as Starbucks and Coca-Cola among others. The companies utilize the extensive market offered by local consumers. Additionally, Hong Kong exports FMCG to other countries such as China (which offers the largest market), the US, and Japan among other countries around the globe. For example, the country’s exports recorded a revenue of HK$20.8 billion in 2015, which was a rise of eight percent. However, most of the products, especially in the food and beverages segment are consumed locally (HKTDC, 2015).

Marketing influences product development significantly. The process involves the identification, anticipation, and satisfaction of customer requirements in a way that makes profits for the company. The assurance of profitability is the key process for any company. As such, companies focus on developing and implementing effective strategies constantly. Critical processes include product development and positioning. The Hong Kong FMCG market offers a great opportunity for increased profit efficiency for FMCG companies. More specifically, companies dealing with food and beverages have a diverse market for entry, product development, and positioning. The food and beverages segment of FMCG includes companies dealing with soft drinks, beverages such as coffee and tea, bakery products, and chocolates among others. The analysis of the market offers an opportunity of understanding the market potential for products in the segment. The food and beverages sector in Hong Kong is extensive and offers a great opportunity for exploration and exploitation (Thain & Bradley, 2015).

The FMCG market of Hong Kong is divided into the personal care, food and beverages, and household care segments. According to Thain and Bradley (2015), the Personal care segment produces and markets products for individual care such as soaps and toiletries, hair care products, cosmetics and skincare products, personal wash and oral care products among others. The food and beverages segment deals with fast foods and processed, packaged, or branded foods and beverages including coffee, tea, soft drinks, and alcohol among others (Gough, 2014; Fahy & Jobber, 2015). On the other hand, the household care segment produces and markets products such as dish wash products and fabric wash products among others (Thain & Bradley, 2015). Companies operating in the different segments must employ different strategies to compete effectively. Effective leadership and management and the integration of efficient processes of product development, pricing strategy, promotion, distribution, and sale are critical for the improvement of corporate efficiency and profitability (Abramovich, 2014; Adamides, 2015; Cant, et al., 2013).

New Product Development and Positioning

According to Luck (2015), new product development process involves a series of activities focused on the design, creation, and the marketing of the product/service. The process is motivated by a gap in the market, which the developer intends to fill or a market need that must be met. As Fahy and Jobber (2015) asserts, the consideration of the customer wants/needs, the competitiveness of the market, and the nature of identified market play a critical role in determining the success of the product in the market. The Hong Kong FMCG market offers an attractive market for food and beverages.

The success of a new beverage in the market will rely mostly on the consideration of the critical steps of its development and the strategies implemented for its promotion, marketing, distribution, and sale. Product development, as Blythe (2016) stipulates, is a critical process that demands efficiency and effectiveness. The process starts with the consideration and analysis of the micro and macro-environmental factors (Bendall, 2010; Luck, 2015). These make it possible to determine the feasibility of an idea and the product to be developed. Hong Kong offers an impressive market for beverages and thus the implementation of the idea would depict significant success if done efficiently. Key players in the market such as Coca-Cola and Starbucks among other MNEs and local companies have recorded significant success in the promotion and sale of beverages and soft drinks (Starbucks, 2016; Coca-Cola, 2013). However, the same companies offer significant competition that poses a threat to the new product. As such, there is a need for the effective implementation of an efficient strategy if success in the sale of a new beverage is to be achieved in the market.

According to Fahy and Jobber (2015), efficient marketing is critical in the achievement of success in promoting and selling a new product. The application of the 4Ps of marketing and other important strategies influences the success of a new product immensely. According to Kotler and Armstrong (2010), the foremost important issue is the product. A company or business person must consider the development of a product that is marketable and that people want to buy. The major issue is the identification of consumer wants/needs, and developing a product that meets the expectations of the consumers in terms of quality and all others expatiations. The Hong Kong FMCG market offers an extensive market for beverages (Leng, 2009). The development of a beverage is a feasible idea if the company has systems and the assets to ensure effective marketing. Additionally, a company should have sufficient resources to ensure the provision of value, quality production, and a constant check and response to customer needs, and concerns (Johnson, et al., 2013; Kotler & Armstrong, 2010). Further, the aspect of product development should involve effective planning and research on the future of the product including any concerns of changing customer needs, preferences, and perception (Kotler & Armstrong, 2010). The company should focus on the production that present and future demands and expectations.

Pricing is another key aspect that must be considered in the development of a new product for the Hong Kong FMCG market. The aspect is critical in the determination of a successful product in the market. According to Blythe (2016), effective pricing is an important aspect of marketing a new product in any market. In promoting a new beverage in the Hong Kong market where multiple beverages from global and local players such as Starbucks among others, it is important to set prices in a way that guarantees the customers the worth and value of their money. Considering the competitiveness of the market, competitive pricing is crucial for the development of the market share of the product. The major concern is to attain customers and the generation of revenue. Customers generally expect quality and value for money and, therefore, the company should prioritize the quality of its beverage and services. The consideration of all aspects related to pricing is critical for the attracting and retaining customers and thus ensuring competitiveness and improved profit efficiency (Johnson, et al., 2008).

Apart from the above mentioned, the company should ensure that the products are at the desired place at the right time. The production process should be accompanied by efficient systems and processes ensure effective production, storage, and distribution while considering cost effectiveness. The beverages should be available at the places at which customers are served at any time the customer(s) needs the product. According to Fahy and Jobber (2015), ensuring adherence to the component of place is critical in improving convenience and customer satisfaction. These play a major role in improving sales and the rate of attraction and retention of customers. In the introduction of a new beverage in the Hong Kong market, there is a need for ensure that customers have access to the beverages and are served efficiently. This goal could be achieved through setting various outlets that promote the specific beverage. There is a need for the company to collect customer surveys to measure delivery and customer service performance (Luck, 2015). Additionally, the development of promotion measures that display the beverage to the market is important. The company must implement efficient measures that allow it to compete effectively with key players in the market.

Further, communication is essential for ensuring successful integration of a new product into the market. It plays an essential role in ensuring that the target market understands what the company offers. The management should focus on the application of various strategies that ensure that customers in Hong Kong are aware of the existence of the beverage and are willing to purchase it. Such measures would include sufficient advertisements and other promotional strategies communicating why the consumer should purchase the beverage. Effective communication through efficient mediums is essential for the success of the process (Blythe, 2016). Online marketing, print promotions, and advertisements, all of which should capture the attention of the target market/customers is important in the process. All the promotional processes should focus on ensuring that customers consider and prefer the beverage over existing beverages or competing products. The exploitation of all efficient promotional strategies would enhance the effectiveness of the company and boosts its sales and profitability (Bendall, 2010). As such, the aspect of promotion is key in the development of a competitive FMCG within the Hong Kong market. The effective promotion is critical for placing the company and the beverage in the desired position in this market.

In the promotion of the beverage, the influence of people and physical evidence is of significant impact on customer satisfaction. Efficiency in the delivery of the services and the beverage is important. How employees interact with the customers and the quality of services they offer determines the reputation of the company in the provision of the new product/service (Blythe, 2016). The company must make sure that the employees are skilled and well-suited for the roles and responsibilities they are assigned. This ensures customer satisfaction and helps in marketing the company through satisfied customers and other platforms. Further, while the introduction of a new beverage into the market may pose various challenges, the integration of physical evidence in the marketing is crucial (Fahy & Jobber, 2015). The company must ensure efficient promotion, packaging, and consider aspects of cleanliness and the implement customer concerns. These serve a major role in attracting customers and growing the market share in the Hong Kong beverages market segment.

Conclusion

Marketing is a significantly important aspect in business. The process helps companies in the improvement of their market shares, their sales, and profit efficiency. Any company must have a corporate strategy that aligns well with its goals, and most importantly, ensures effective and efficient marketing strategies. The concept is of great concern in the FMCG, which have short shelf spans. Companies in this market must invest in extensive marketing to compete effectively. In Hong Kong, the FMCG is broad and greatly influences its economy, socio-economic, and human development almost all sectors of its development. The different segments of the FMCG market in the State offer an opportunity introduction of new products. The country has highly developed economy and infrastructure, its taxes are low, and offers a broad and diverse market for various products. However, impediments such as competition from global and local companies among others pose a threat to start-up businesses. As such, there is a need for the implementation of efficient and effective strategies if any new business is to survive and be profitable. The introduction of a new beverage in the market would, for instance, demand an effective pricing strategy, quality in the production and delivery, efficient promotion, staff, and physical evidence. The effective integration of the Ps and the assurance of effective leadership and management would enhance the competitiveness of the beverage and the company in the Hong Kong FMCG market.    

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