The strategic goal of Chatime according to the case study is that they focused on Chinese customers. They made promotions in mandarin language which conveyed their Chinese customers only. Even after expanding their business in Australia they focused keeping their stores available to place where the Chinese populations are more. Chatimes prime aim was to capture the Asian-Australian market. Now Zhao, the local master franchiser aims to release more outlets. His target is to reach 50 at the year end to which he needs to move out of traditionally Asian border populated by second and first generation immigrant families as well as overseas students.
This kind of strategy is not effective because it targets a particular group of customers and not others. In order to attract customers of different culture it needs to understand the customers need or survey their preference and tastes. Like McDonalds adopted a strategy in India that they introduced potato burger as their Indian customers were mostly vegetarian. The business will have
Less scope to diversify: following the strategy of targeting a particular group of customers a company cannot diversify it is a disadvantage because diversifying helps in financial gain. Because after acquiring and going for a joint venture a company gets the generate profit from the business and along with it the borrowing power and cash flow also generates (Proctor, 2008).
Concentrated market: if the market for the company becomes concentrated to only a particular type of customers then the product becomes focus product and the organization gets a tough competition with its customers. Moreover its market share also decreases. While targeting new customers the base of customers also increases (Boone & Kurtz, 2013).
Customers: if the product targets a specific group of customers then it is quite obvious that if the product is introduced to other types of customers then the acceptability will be less for the product. Customers may not prefer to buy the product and a premature evaluation plays its role. If a product is targeted to a particular group of customers then the company misses out to reach those customers who may seem to like the product. Suppose if a chocolate manufacturer aims to target children for that product then it may happen that the teenagers as well as the adults may prefer to have that chocolate this means focusing on the children for that chocolate will make them lose a good number of adult and teenage customers (Ferrell & Hartline, 2010).
Answer to question 2:
The competitive advantage of Chatime can be divided in to three parts:
1. Quality: Chatime uses standard machines for producing coffee and tea machines so as to produce the best quality drinks so as to make the beverage acceptable to its customer. Chatime uses imported tea which is best in their own countries and the ingredients are also highly appreciative minus preservatives and additives. Chatime collects designs and concept from the Japanese producers of teas, and also takes indication from the Japanese concept of quality control (Beall, 2010).
2. Innovation: cha time has a vast availability of teas and coffee, they have many series of tea along with variety of toppings and coffee as well. They have series of fruit teas, fresh teas, mousse series, QQ jelly series, 9 refreshing juice and oriental pop-tea. Apart from the various range of teas, they also use unique ingredients for making their products. They have a product named “White Pearl” which has been their bestseller (ShaolinTiger - Kung-Fu Geekery, 2011). These White Pearl teas are made from the extract of seaweed which has high fiber and low calories and sugar. There are considerably other teas also which are very innovative like the milk tea of red bean pearl.
3. Promotional Strategy: Chatime has a very unique style of promotion. Chatime initially focused on the Asian market specially the Chinese people. They had the idea that Chinese people would prefer tea and their products for which they provided promotions in mandarin language. This is a cultural proximity strategy which was sure to capture the attention of the Chinese people. They have much product promotional strategy in which they provide many facilities for their customers.
Chatime focused in providing healthy teas of fruit flavors to their customers because their customers were more interested on having healthy food. Chatime not only provided healthy products but also stressed on providing their customers fresh products. To this, the sale had been quite well. Through their products they aimed to establish that they are expert in producing teas helps their consumers maintain a healthy life (Cavusgil & Knight, 2009).
Answer to Question 3
The problems or the challenges of Chatime are:
Ensuring that the product would fit the mainstream and the local market
Focusing on educative campaign for marketing that would change the perception of the consumer
And persuading the franchisee for opening stores outside the suburbs where only Asian resides.
These three were the main challenge of Chatime for expansion strategy, but in industrial terms Chatime had competitors in the market. Competitors are always a challenge for a company and so did Chatime have its competitors like Ghingcha and the market leading Easy Way. Ghingcha had also newly opened stores along with Chatime therefore a high possibility of competition was there. To this problem and the problem for entering into the market there was a sheer requirement to understand the need of the non-Asian consumers. For any launch of product the company makes a survey of the needs and the preferences of the customers and with the help of the survey the company proceeds in introducing the product into the market (Samli, 2013). What Chatime understood is that the Australian preferred sugarless and healthy beverages. They were tired of the American products which not only had high calories but also increased sugar level that may cause various health issues to the people. Chatime introduced at first skimmed milk and soya milk keeping in mind about their health conscious customers, and this turned out to be a good start for the company (Reviews, 2013).
Answer to question 4:
In order to develop for to reach their strategic goal Chatime needs to focus on its internal capability. For this the service plays a key role. A company not only survives for its innovative strategy, product quality and promotions but also with its unique service system. With three prominent differentiated products Chatime has its own demand and group of customers but a strategic goal requires services that would help them to retain their customers. This can be done by creating customer loyalty, and for customer loyalty the employees need to be efficient in their service. Cha time has a specialized research and management team and they have exceptional product innovation policies along with good quality system of audit (Chatime.com.au, 2015).
The tea testers and the tea developers are professional and the company has a high quality of technology used for its product. Cha time needs to strengthen their customer relations and make their product available to nearby locations. Chatime have to develop their customer service, their number of stores and an ambience for their customers in order to set their mood of having tea. A store location and its environment is significant consideration. It is because a good space a good environment makes the customer stays for a long time (Baines & Fill, 2011). Not only that, a good ambience attracts a good number of customers. In order to do so Chatime required a unique color that would depict their product quality and services. Where a bright purplish color was used for its launch there they needed a good color choice for their store because purple and green seemed to be not suitable.