Positioning Against Competitors

 

Competitor Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above, in which the data of the competitor analysis of assignment one is structured, shows that Bright Dairy is the most expensive yogurt brand since they charge their customers between 5.20- 9.40 CNY for a yogurt between 150-180g. Weiquan is second in line selling its yogurt at 5.50 CNY for a cup of 180 grams and is followed by Danone with a selling price of 4.23 CNY for a cup of 170 grams. The cheapest brand is Mengniu with a selling price of 2.11 CNY for a cup of 100 grams of yogurt when buying in bulk. This competitor analysis revealed that these brands sell all different flavors at the same price, and that almost all the main competitors are selling plain and aloe flavored yogurt, which is very different from other countries who prefer more typical flavors.

 

Price Point

In order to supply the Chinese market, the existing production facilities of Chobani in Australia will be used. Australia is not an unknown source for China regarding dairy products as they exported about $416,230,000 worth of dairy products between 2013 and 2014 to China (China- Australia FTA, 2014). Recently, on the 17th of November in 2014, China and Australia signed the Chinese-Australian Free Trade Agreement. Within 11 years this Free Trade Agreement will eliminate existing tariffs on goods imported and exported between the two countries (China – Australia FTA, 2014). Part of the Free Trade Agreement between China and Australia is that China will implement a 12-25% tariff reduction for Australian dairy producers exporting to China. This tariff reduction will take place in 4-11 years.  Within these 4-11 years, import tariffs on Australian dairy products will be fully eliminated to create lower costs of doing business with the respective countries (China – Australia FTA, 2014).

 

Chobani is priced at $1.29 in the United States. Since Chobani in China will be importing the yogurt from Australia, the current import tariffs must be taken into account when calculating Chobani’s price point in the Chinese market. With a 12% import tariff Chobani would have to be priced at $1.44, 8.91 CNY, and with a 25% import tariff Chobani’s yogurts will be priced at $1.61, 9.96 CNY. In the long term, when the import tariff is eliminated, Chobani’s price point would be $1.29, 7.97 CNY. The cost of producing Chobani yogurt is kept private but as Chobani is so successful it can be assumed that the typical price point is profitable and it is the base for this price point. Transportation costs from Australia is a consideration, but Chobani is willing to eat this relatively low cost so that they can reach their price sensitive customers for the time being. When the import taxes are eliminated, this can be addressed so that they are making more profit. The profit margins are rarely very low in the dairy industry, as they must account for spoiled products and the likelihood of not selling their products in time. It is assumed that Chobani will still make profit at these price points.

 

With the current average tariff, Chobani’s price point would be 9.43 CNY for a 150g cup of yogurt, which is slightly higher then one of the main competitors, Bright Dairy, but it will offer something that they don’t, and that is natural and healthy yogurt. According to the focus group, Chinese consumers are willing to pay higher prices for trustworthy foreign brands, especially when only natural ingredients are being used. This is also confirmed by the results of the questionnaire of the selected target group, 29% of the ‘healthy adults’ are willing to pay a price of 8 CNY or higher for healthy yogurt, and this was before they were even exposed to the all-natural facts and sustainable practices of this brand.

 

 

Calculations

       

         Calculation: $1.29 * 12% = $1.44 ($1 = 6.19 CNY) = 8.91 CNY

                                  $1.29 * 25% = $1.61 ($1 = 6.19 CNY) = 9.96 CNY

       

          Mid point: ($1.44 + $1.61)         $3.05/2 = $1.52 or 9.43 CNY

                                           2

 

Product Innovation

 

Flavors & Styles

The overall results of the quantitative survey showed that the Chinese consumers have a particular interest in plain yogurt, as well as strawberry and blueberry flavored yogurt. Therefore the focus will be on these flavors for the first step of breaking in to the Chinese market. The Chinese consumers are more willing to try out new things then in any other market, so new Chinese oriented flavors will be introduced along with traditional flavors (The Economist, 2014). A flavor offered by most of Chobani’s main competitors is aloe; therefore this new flavor will be added to Chobani’s Chinese product portfolio in order to stay competitive. Besides aloe, Chinese consumers have a strong preference toward green tea flavored products and honey-flavored products (Silverstein, 2012). Because these flavors complement each other and honey ensures that only natural sweeteners are being used, they will be combined as a green tea honey flavored yogurt for the Chinese market (Healthy Eating SF Gate, 2014). Thus, the flavors that will be promoted in order to break in to the Chinese market will be Plain, Strawberry, Blueberry, Aloe and Green Tea Honey.

Concerning the types of yogurt, five lines of Chobani products will be introduced in order to serve the target market: Snack Cups, Flip Cups, Fruit on the Bottom, 100-Calorie, and Blended Chobani Yogurts. The lines will be limited and only include the major flavors as well as some new Chinese flavors. The snack cups will be produced in all of the proposed flavor variations that are aimed at the Chinese market: plain, strawberry, blueberry, aloe and green tea honey. Flip Cups will contain a large portion cup of plain yogurt, as it is highly preferred by the Chinese market, and a small additional cup of various all-natural toppings. This will give consumers the option to choose their own ratio of plain yogurt to toppings. Fruit on the Bottom was chosen because the focus group suggested that the Chinese like to eat fresh fruit and would consider it a valuable addition to their yogurts. 100-Calorie Chobani Greek Yogurt will address the calorie counting population in China, including the addressed target market. Blended yogurts will include basic Chobani and Chinese flavors to introduce the market to this brand before branching off into different product lines. Two major insights will be addressed: the provision of plain yogurt in combination with other flavors; leaving choices to the consumer on whether they want to not add additional ingredients at all, add a little bit for a slightly sweet snack, or all of it for a sweeter yogurt or dessert; as well as letting consumers feel as being part of the making process.

 

Packaging

The selected target segment consumes yogurt as breakfast, snacks, and dessert, so the package size will be small and convenient for any use. As the target market survey also resulted in equal grocery shopping purchases for both family, and themselves, the Chobani Greek Yogurt products will be offered in packs of two and four in the main supermarkets. The convenient stores will be supplied with individual cups in order to fulfill the needs of the on-the-go consumers during their business schedules. 

 

Colors & Product Information

According to the results of the focus group, Chinese consumers are attracted to bright colored packaging with a clear design. The health-oriented participants especially showed a strong affection toward “fresh” and bright colors. Therefore the packaging of the Chobani products will have a “fresh” look and feel. For example, the packaging for red fruit flavored products, like Strawberry, will be partially bright red with hints of other bright colors. The packages will also contain the message Chobani uses on all of their products around their world; ONLY NATURAL INGREDIENTS. Because of the recent dairy scandals in China, and the Chinese consumer awareness about these scandals, three additional benefit statements will be added to the packages: Real Ingredients, Natural Sweeteners and No rBST growth hormones. The pictures below are an example of the proposed packaging.

 

 

 

 

 

 

 

 

 

 

Finally, the ingredient and nutrition information of the Chinese packages will be printed in Chinese according to Chinese regulations to avoid additional stickers at the Chinese food regulation department. This will ensure that the package will stay authentic, which will be important to attract Chinese customers. Another important factor that will be added to the packaging will be a QR code that will like to the Chobani WeChat. This will be discussed further in Assignment #4. This combination of factors will create value for the Chinese consumers and give them a reason to buy Chobani Greek Yogurt.