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WANG’S FORTUNE TEA Group Case Study 2 Thomas A. Tanamas & Alexis Tyson Wang’s Fortune Tea (WTF) is a Chinese herbal tea, a remedy that has been around since the 1800’s but Wang’s Fortune Tea created it into a pre-packaged reading to drink functional soft drink with a sweetened flavour.
They’re product is unique and there is little else like it in the international market. They have managed to create their unique brand image not only through the product itself, but also because of their marketing mix that helps to promote a strong brand image of healthy life, and ancient Chinese remedy.Product WTF implements single-minded product strategies: the product has not been changed since it came into the market in 1997 and neither has it’s packaging. This is something they should expand on for long-term development, as in this day and age product life cycle is limited. One positive about the product in the Chinese market is that the name is easy to read and easy to remember: “Lao Ji” translating to “Old Fortune”. This name instils in consumers mind the ancient remedies, with a pre-packaged 21st century edge that this product tries to promote.Being an easy recognizable and memorable name it also promotes consumer mindset stickiness.
In 2003 WTF changed it’s company slogan from “Healthy family always with you” to “Afraid of internal fire? Drink Wang’s Fortune tea? ” This slogan is far more direct and conveys exactly what it is that WFT is trying to convey, it also sets up the possibility of classical conditioning: when a consumer feels the “internal fire” they simply need to purchase a WFT. Price The pricing of WFT differs depending on which product market you are classing it as. When classing it as a soft drink they appear to have adopted a high price strategy.As the creator and the leader of the “herbal tea” segment, WTF prices its product higher than the average price of soft drinks.
Adopting value-based pricing. Instead of the production cost, WFT sets its price based on consumer’s perception of the product value. However, different from other soft drinks, Wang’s fortune tea is positioned as a kind of functional drink, which can prevent internal fire. Compare with other functional soft drinks (such as red-bull), the price of Wang’s fortune tea is not expensive. The higher price is representative of higher quality.WFT proved its quality and value by pricing at a relatively high price to most canned drinks.
But as a fast moving consumer good it’s premium pricing in the vitamins drink market makes $. 42 US no longer as expensive, resting this product in a happy medium between soft drink and functional drink. Place Place refers to the marketing channels in which a product can be purchased. WFT adopts four marketing channels: modern channel, conventional channel and restaurant channel.
All these distribution channels allow their product to be readily available and at each of these chains it is heavily advertised.By entering supermarkets, where it contains huge amount of customers, WFT makes its brand known by customers, increasing brand awareness. Moreover it is also sold in convenience stores and other retail stores. Customers obtain convenience by the convention channel.
Furthermore, WFT seeks out the restaurant channel to enlarge its market shares. With the slogan “Afraid of the internal fire, drink Wang’s Fortune tea” WFT is sold in restaurants that serve hotpot, Sichuan and Hunan cuisines, and any other foods, which may create internal fire.More specifically WFT paired up with KFC to promote it’s slogan “Afraid of internal fire, drink WFT” this meant consumers could justify the unhealthy act of dining at KFC if they drank a WFT afterwards, instilling the classical conditioning of unhealthy food to WFT. Promotion Promotion is an effective way for companies to make the benefits of their products known by customers. Advertising, sales promotion and social relation are all different means of promotion.
WFT repositioned its brand as a functional soft drink when SARS broke out in 2003, for people in the nation realized the importance of health.Repositioned red can “Wang’s Fortune Tea on China Central Television (CCTV) at prime time TV with images of eating hot food and staying in watching football. This not only helps the repositioning of Wang’ Fortune Tea but also helps achieve brand performance associations. Point of Purchase displays were heavily pushed in supermarkets, convenience stores and supermarkets. This coupled with enormous outside advertising meant that consumers could not escape the product increasing top of mind awareness and in the climate of fear that was Asia in 2003 about SARS meant that whenever that fear was evoked WFT was there as a safety measure.WFT created a television series: Wang Zebang about Wan the creator of WFT remedy.
Having advertising that was engaging, such as this television series, meant that consumers dedicated more attention to the advertisement. Learning what could then be reinvoked by the constant POP displays and outside advertising previously mentioned. In addition to advertising, sales promotion is also a useful way to boost sales. For the company, sales promotion supports new products or packaging effectively by increasing the short-term sales.
Meanwhile, customers will also benefit from it.WFT created lucky draw scratch card promotion and prizes in 2003. With this approach, customers get opportunities of winning a prize only if they buy the product. The prize slogan reading: “to smooth heat with Wang’s fortune tea, to blue waters and green hills I go” free trips to cooler destinations.
This again concreted the brand position of WFT having a “cooling” effect. Public relations of a brand can be built by sponsoring in the sense of social or public beneficial activities. Wang’s Fortune Tea sponsored the building of many schools and gave scholarships, “Wang’s fortune tea cares for scholars”.This helps Wang Fortune Tea build good public relations and establish positive enterprise image. Question 2. Over the past several years, consumers around the globe are becoming more health conscious than ever before. Today’s modern consumers are shifting to a more active and healthy lifestyle and this change is clearly reflected in the way manufacturers develop and market their products.
Although the demand for healthy alternatives does exist, there maybe a limit in how the Western market accept such alternatives.When thinking of a healthy alternative, the average Western consumer may think of concepts such as low fat, no sugar, no calories and no artificial ingredients. When confronted with the concept of a new herbal drink from a foreign country that claims to combat “internal fire” and relieve all sorts of ailments, the average Western consumer may boldly reject such claims in absolute disbelief. Although there is an opportunity for international market growth, the manufacturer of Wang’s Fortune Tea will most certainly face a challenging battle in the pursuit of educating and marketing their products to the international market.The difficulty in marketing their product is multiplied by the fact that they are offering a product that is able to cure an ailment known as “internal fire” that is unheard of in the Western culture.
Before they are able to sell their product, the manufacturer will first need to educate and convince that the effects of “internal fire” are real and relevant to the Western market. Cross-cultural research and marketing will play a crucial role in educating the educated and developed market.Strategies including the funding of studies and research to support the claims of Wang’s Fortune Tea by research institutions in the international market along with brand ambassador strategies through product endorsements and sponsorships of well-known individuals will boost consumer confidence in the product and the brand. From a cultural standpoint, even the concept of “internal fire” itself maybe too farfetched for the average consumer, as a result re-naming the concept to a more familiar term such as “balance of the immune system” or “balanced metabolism” maybe more suitable for consumers in the international market.When examining the competitiveness of Wang’s Fortune Tea in the international market through the Porter’s five forces model, the manufacturer of Wang’s Fortune Tea maybe subjected to a difficult and challenging start especially with the high bargaining power of customers and thereat of substitute products.
Distributors and retailers may refuse to carry the Wang’s Fortune Tea product line due to the lack of initial product popularity. The manufacturer of Wang’s Fortune Tea maybe required to rely on heavy iscounting and offer higher margins for the distributors and retailers to convince them to carry their products. Despite being a unique product with a distinct product benefit, Wang’s Fortune Tea competitors may include ready to drink beverages such as energy drinks, vitamin infused drinks and conventional chilled teas. A clear product differentiation strategy will be required to ensure that Wang’s Fortune Tea is clearly categorised and differentiated as a beneficial “herbal beverage”. In recent years, concerns over food safety and food standards in China have been raised.
With incidents of chemical contamination and unsafe practices which often ends with devastating consequences, consumers in the international market may think twice before consuming a product that has been produced in China. The manufacturer of Wang’s Fortune Tea should obtain international accredited certifications such as ISO 9001 along with other food safety auditing measures to boost consumer confidence. The building of a second international production or packaging facility in a strategic location such as Singapore or Malaysia may also assist in boosting consumer product confidence.