Lemon & Paeroa or L&P is a popular soft drink which is manufactured in the country of New Zealand. The recipe started with simply adding lemon juice to carbonated mineral water but in the recent times, the brand has launched many new flavours, all with the charm of the old times. The unique water contains mineral water that originates from the bubbling hot springs of the Paeroa area of New Zealand. The unique water boasts of medicinal properties that were quickly a hit amongst the residents of the area. The palatable water soon made a fan base with locals occasionally squeezing a lemon or two to make a fantastic concoction that quenched thirst immediately. The spring water that continuously produced effervescent warm water originally contained magnesium bicarbonate in the ratio of seventy three grains to a gallon of water. Besides, it quickly became popular for its remedial properties especially the one that worked miracles in dyspeptic conditions. Indigenous people of the land also believed that the water might be very helpful to end the uneasiness which follows constipation (Burns, Bush& Sinha, 2014).
Created in 1907, the water with its distinctive sweet taste, mixed with lemon became an all-time favourite table water that can easily compete with the best table waters and mineral waters imported around the world. The Paeroa Natural Mineral Water Company kept on manufacturing the concoction until 1915 and later sold the rights to the Menzies and Company. The Menzies and Company opened a factory in 1926 at Paeroa for the sole purpose of manufacturing this special water. Besides, it merged with CL Innes in the year 1963. During the 1970s once again, the cola L&P process was acquired by the Oasis Industries before it was finally handed over to the Coca Cola Company. It has since remained the favourite of the Kiwiana culture which is ever so popular in the New Zealand scenario. Besides, the tagline and urban lore around the drink makes it all the more popular and engages the mass to truly make it world famous in New Zealand.
The expansion of the product will be in the Asian market, to be specific in the Chinese market; following analysis is regarding the competitor analysis in the Chinese market, strategies that are undertaken to reach out to the target market along with some of the recommendation (Dunning, 2013). The target market that has been selected for the product is teenagers, who have a liking for a fresh and minty taste. It can be said that most of the target market are dependent because according to the regulations teenagers should be engaged in full-time education. The connotation of the target market can be defined as a marketplace where a particular company wants to sell its produce, a product or a service. Identifying the target market remains an all-encompassing essential step to make a successful marketing plan. Besides, a target market contains target customers towards whom, the company channels its services or products towards in order to cater to them, the best the company can offer (Baker, 2014). The target market is a segregation which is separate from the whole marketplace and the factors to separate it from the larger marketplace are psychographics, Geography, demographics as well as the buying power of the targeted customers (Cavusgil et al., 2014).
The hot and humid summer of China fuels the beverage industry of the country that caters to the population, both hot and cold, alcoholic and non-alcoholic drinks that will let them stay hydrated and satiated under the sun. Besides, being an exotic tourist destination, the country also offers many types of drinks that are made by all natural local ingredients. Street food scenario, which remains ever so popular in China is home to different locally sourced ingredients which are used thoroughly to produce tasty juices, fresh from the scratch. Besides, the Asian market also brews some fresh and tasty tea and other herbal concoctions that are mandatory for the taste buds of any tourist who want to explore the local cuisine. Drinks such as tapioca bubble tea are readily available. A healthy drink with a bitter aftertaste, it remains a favourite through centuries (Lovelock & Patterson 2015).
The abundance of coconut milk and soya milk in the market quenches the thirst of every Chinese (Leeflang et al., 2014). Wahaha Nutri-Express is another drink which remains popular in the local market. The sweetness of the drinks make the taste buds dance with joy and the customers remain happy with the lower pocket pinch and great taste. Besides, the local natural drinks are always almost made from the scratch and can be well customized with the addition of spices to suit the taste buds of the different customers (Verbeke, 2013). Moreover, these come an array of drinks such as cold coffee which attracts the western tourists as readily as does the iced herbal brews to the local customers.
Ginseng tea along with many varieties of fine Asian tea remains available at a very cheap rate to suit the palette of the potential customer. It is also common in the Chinese marketplace for the customers to opt for fruit smoothie to instantly satiate hunger as well as thirst. Besides, these non-alcoholic drinks, there is an abundance of alcoholic drinks which are available readily at a very cheap price. The rice wine and other exotic local beer and wine keep the population delighted. There remains a stiff competition in the marketplace between domestically produced local beverages versus international beverages and soft drinks (Ahmed &Rafiq, 2013).
Besides, with the increasing population in China and the emergence of youth, it has been seen that the tendency to buy and consume aerated imported drinks is on the rise. These group of people have grown up in the local scene where street drinks are a part of the regular life. A glass of sugar cane juice may sound exotic to the ears of the tourist but for a regular Chinese, the more exotic is the sweet aerated drink, which brings with itself, the lustre of the western culture. In order to win over the local market Coca-Cola, the owner of the L&P drinks should invest more in the Chinese market so as to conquer the market, just like it has with an array of soft drinks, worldwide. The local manufacturers and distributors of many drinks have applied new strategies to have a strong grasp of the common target market. The local manufacturers have also started investing an adequate amount of money in their production unit so as to compete all the more with the International beverage brands like Coca Cola owned L&P. A world class manufacturing plant can indeed give L&P a good run for its money. Foreign investors such as Coca Cola, LaVie water and PepsiCo have a huge competition as these local manufacturers have targeted the common business market and customers and alluring them with great recipes that would a popular hit without fail. Besides, the local businesses have incorporated healthy drinks and healthy ingredients which would not only quench thirst but also supply essential nutrients.
From the above discussion it can be said that Fanta,7up, Mountain Dew, Wahaha Nutri-Express are the direct competitors to the product. On the other hand, tea is one of the major indirect competitions in the Chinese market; ice tea is a popular drink among the target market and there are a number of companies in the market that has a plethora of choice in terms of flavors, on the other hand some of the local drink like soda and lime etc are also competition to the product.
Marketing Mix of L&P Drink in China
A marketing mix is an amalgamation of products that should be kept in mind for any company or business in order to let its customer allured into buying its products. Usually, these factors can be very well controlled by the company (Grant, 2016). Marketing is the function which helps the company to connect with the customers and thus understand the needs and requirement (Helm &Gritsch, 2014). Marketing is an important step in understanding the nature of the target market. With the help of the concept of marketing mix strategies will be developed to reach out to the above mentioned target market for L&P in the Chinese market. Marketing mix for a product includes four aspects: product, price, promotion and place. All these aspects of a product are important to connect with the customers.
The product that will be introduced in the Chinese market is a carbonated water based drink that has a flavour similar to that of fresh lemons. L&P is an iconic soft drink from the Coco-Cola company available in the New Zealand. Many New Zealanders have grown up drinking this light-hearted beverage that is a big part of the culture of New Zealand (Kim & Mauborgne,2014). To mention its popularity, there is a massive installation of a giant bottle of L&P in New Zealand which gains massive tourist attention. Such a simple recipe with such great taste makes it an ideal beverage which is also the essence of the history of New Zealand.
The product that will be established in the Chinese market in terms of flavor will be similar to that of what is available in New Zealand. However, there are certain changes that are required in the packaging. In china it has been observed from the competitor analysis that language plays an important role in packaging a number of established brands change their logo and language to suite the preference of the customers in the Chinese market. As the logo of the brand is L&P letters of the alphabet, therefore this brand identity cannot be changed. However there are a number of texts on the bottle which should be in the mandarin language.
The colour scheme will not be changes as it is also iconic with drink and is associated with the identity of the brand. In New Zealand there are a number of quantities of the product available. But in china in the early stage of introduction there are 2L bottle, 600mL bottle and 355mL bottle will be introduced. The colour of the drink itself is pale yellow almost like the colour of a lemon
The price of L&P is cheap as it is a substitute for table water. In the New Zealand market, it is available under three dollars which again, depends on the capacity of the bottle. The global market prices of other soft drinks although can easily compete with L&P (Nagle & Müller, 2017). L&P usually keeps a marginal price that is quite affordable for the mass population. In Vietnam, L&P can gain massive popularity, thanks to its cheap price that creates the chance of it being sold in almost all the local bars.
The price of the product will be based on the target market and as the identified target market of the drink is dependent the price of the product will also be kept low in order for the teenagers to be able to afford it. Therefore the 2L bottle will be priced at 7 Reminbi. And the 600mL bottle and 355mL units will be priced at 3 and 2 Reminbi respectively. Therefore, it can be said that the products are priced at par with the competitors as any 2 L soft drink is priced anywhere in between 6-10 Reminbi. The pricing strategy of the company is competitive as there are a number of brands established in the new market. Therefore the intensity of competition is a hindrance for the company to take the cost leadership strategy; however, L&P is a comparatively low priced drink as it does not include any complex ingredients. On the other hand, since the price is like any other soft drink the company has to focuses on other strategies to gather the attention of the market (Li, Hou, Chen & Li, 2016).
The place in which that the products will be distributed is an important decision for the marketing team in order to ensure that the product is available among the target market (Akaka, Vargo & Lusch, 2013). Being owned by Coca Cola, L&P has a great advantage of using the parent companies infrastructure and brand value. Coca Cola drinks are massively popular in China and thus the brand name Coca Cola will work in favour of L&P. Besides, the huge supply and retail chains and networks of Coca Cola will also be beneficial for the sales of L&P. Owing to Coca Cola’s huge network systems it will also be rather easy for L&P to reach the urban as well as rural customers (Khan, 2014). Although Coca Cola does not bulk import the drink to these places, supermarkets of the countries where the drink is available do have a knack of storing L&P drinks in their shelves as a way to represent the world cuisine to its potential customers.
The team wants to eventually distribute the product in the corner stores as well, however, in the initial stage of introduction the product will be made available in Walmart China. Walmart is one of the biggest retailers in the world and has a significant presence in the country. The product is already available in Walmart in other parts of the world and hence it will be advantageous for the company to introduce the product in a place whose environment is known and thus the two organisations can develop a professional contract in distributing the products in the Chinese market. On the other hand in order to make the product available the company will connect with some of the distributors of Coco-Cola so that they can introduce the product in the local market as well. The marketing team should focus on distribution of the product near educational institutions and market areas.
Promotion is the process of communicating with the target market in case of expansion of the product in the Chinese market the company will have to establish a compact plan to establish the brand, inform the target market that the product is available and also to inform that the taste of the product is refreshing and flavorful (Piercy, 2014). L&P is a master of branding. Since a very early age of its foundation, the brand has started investing in advertisements that include famous personalities. Besides, being synonymous with the Kiwiana culture, L&P thrives on being a brand who serves a simplistic recipe. The famous catch line, World Famous in New Zealand shows their confidence that they truly believe in the simple recipe which can get the best of accolades worldwide, just like it has in New Zealand (Papadopoulos & Heslop, 2014).
The tools that will be used by the marketing team to communicate with the target market are:
Advertise: there are a number of modes of advertising but the company will undertake some of the traditional method like television advertising and OOH. The television advertising will establish the fact that the company is introducing a soft drink which is refreshing and is perfect for the hot and humid summers of the country. The advertisement will feature teenagers as they will establish the target market. The advertisement will be placed in between shows which are targeted for the teenagers (Huang & Sarigöllü, 2014).
For the ooh the team should ensure that the hoardings and billboards are near places where the target market can easily spot the advertisement. Again the message should be aligned with the television advertisement to maintain parity in the strategy. On the other hand pamphlets and standees will be asked by the distributors to send the retailers to put up in the stores to spread the word of introduction (Buil, De Chernatony & Martinez, 2013).
From the strategies that have been undertaken it can be said that the company has a pull strategy where the customers are urged by the company to take a look at the new product that has been introduced.
- The company must focus on the promotional strategies as the establishment of the brand is the most important while expanding
- The message of promotion should be clear
- Use of local language is one of the most important aspects to connect with the target market and hence that should be included
- In order to make sure that the promotion strategy is successful the company can used both pull and push tactics. They can include the retailers to set up a tasting booth in the compound so make the customers acquainted with the taste
- Another recommendation for the company is to place to place the product near the target market in places where the chance for teenagers to gather are high
- As there is significant number of competition the company has to establish the brand image in order to make a recall value for the products.
- The content and the creative part of the advertisement should be quirky and fun in order to get the attention of the youngsters
In conclusion, it can be inferred that the world famous in New Zealand drink L&P would definitely pave the path of success in China if it pours as much dedication as it had in tapping the New Zealand market. With a parent company like Coca Cola giving L&P drinks backup with a supply chain, retailing network as well as massive brand value, it is bound to penetrate the Chinese market, which is a cultural melting pot and a great tourist spot. Along with a Kiwiana image, the brand boasts of a great taste, which has turned into a phenomenon. L&P is a huge success story coming from the land of New Zealand. It is synonymous with the early and indigenous culture of Kiwi. To reach the zenith of success in China L&P should try to be synonymous with a messenger who offers the taste of New Zealand to the people of China. There is no doubt that the local drinks of China will represent China far better than L&P and hence L&P should stick to spreading the culture of New Zealand through its unique flavours in the land of China. Proper marketing strategies that include interactive promotion in both the urban and rural context will give the people of China the idea of the brand and its products. Besides, it is a must that the brand uses the infrastructure and supply chain of Coca Cola to reach the interiors of China.
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