Australian suburbs with a high proportion of Chinese residents, where might you expect to find additional Chatime outlets?
Chatime is a Taiwan based beverage chain offering bubble tea. It has 800 stores across the globe and has 45 stores in Australia. Within a decade, Chatime has experienced significant growth in Australia. It has been found that the social and cultural aspects of the local Chinese population in Australia have contributed in the success of Chatime. Chatime focuses on serving high quality Taiwanese tea using fresh milk. It is trying to capture the Australian mainstream market through positioning Taiwanese tea as healthy and freshly prepared beverage which has distinct aroma and flavor. The capability of Chatime in replicating and providing innovative and reinvented tea beverages have contributed in the success of Chatime. The demand for bubble tea has been increasing in Australia and the health conscious population focuses on beverages which are healthy as well as fresh. In order to address the growing level of competition in the Australian market, Chatime has focused on altering its marketing strategies.
SWOT analysis is a strategic management tool that helps in assessing the internal factors such as strength and weakness of the organization as well as the external factors such as opportunities and threats (Sadler, 2003). In this section, the SWOT analysis will be undertaken for Chatime in order to develop appropriate strategy for ensuring success in the Australian market.
The major strengths of Chatime are listed below:
1. Chatime uses the natural ingredients of superior quality which do not contains additional preservatives 2. Chatime does not serve pre-made tea or tea powders. 3. The company uses fresh milk delivered by the Australian farmers. 4. The tea served by Chatime has more flavor and fragrance. 5. It is offering new innovative drinks without affecting the flavor of Taiwanese Tea.
1. Chatime is limited to the natural market niche and it has not explored the market beyong the regions where population of Asian people is higher. 2. The branding strategy of the Chatime has not been effective to attract the target audience as it has failed to communicate the health benefits of fresh pearl tea served at Chatime.
1. Australians are found to be health conscious and loves fresh foods and beverages. Chatime has focuses on serving only fresh beverages which will help in attracting the target market. 2. Chatime has focuses on delivering new and innovative beverages on the basis of the local taste and preference which is one of the most important factors of ensuring success in the Australian market. 3. The Australian market for tea is growing due to its flavor, taste and health benefits. Threats 4. One of the most important threats of Chatime is the growing rivalry of shops offering tea beverages in Australian market. The growing intensity of the competition is considered to be a major threat for Chatime (Sadler, 2003). 5. Chatime will encounter difficulty in identification of the distinct characteristics of the local market for developing new products which will match with the taste and preference of the local market (Czinkota and Kotabe, 2001).
Porter’s Five Forces Analysis
Rivalry among the competitors
Rivalry among the competitors refers to the intensity of the competition in the market. It has been observed that the demand for bubble tea is growing in the Australian market. Hence, increasing number of companies is focusing on entering the market (Sheehan, 2011). In the Asian tea market of Australia, the market leader is EasyWay. Additionally, a new brand GongCha has also entered the market. These brands are offering the authentic Asian tea beverage to the Australian market. Hence, it can be found that the rivalry among the competitors is moderately high in the market of Australia.
Bargaining power of suppliers
The major ingredient i.e. tea is exported from Taiwan and there are plenty suppliers for Chatime as the company is based in the same nation. Chatime focuses on using fresh ingredients and the fresh milk is supplied by the Australian farmers. Chatime significantly supports the farmers in Australia. Hence, it can be stated that the bargaining power of suppliers is low in this case (Winer, 2004).
Bargaining power of customers
Bargaining power of customers rises when they have many alternatives (David, 2005). In the Australian market, there are potential shops which are offering authentic Asian tea. The customers can get the similar or superior product from other shops such as EasyWay and GongCha. Hence, the customers can easily switch to other shops on the basis of their preference and the product quality along with the marketing strategy of the company. Hence, the customers have high bargaining power (Jeffs, 2008).
Threat of new entrants
Threat of new entrants is one of the most important forces which have a significant impact on the business. It has been observed that the Australian market has an inclination for the healthy and fresh food and beverages. The demand for bubble tea is growing in the Australian market due to the presence of the Asian immigrants and the health concerns of Australians. Additionally, it is found that the barrier to entry in the industry is low. Consequently, more number of investors will focus on capitalizing the market opportunity. Hence, it can be stated that the threat of new entrants is high which is not desirable for Chatime.
Threat of substitutes
Coffee is the substitute of tea. In Australia, coffee is the most popular non-alcoholic beverage (Pennington, 2014). The demand for coffee is significantly high. However, tea is healthier than coffee and the health consciousness among the Australian population is rising. It has been observed that threat of substitute is moderate (David, 2005).
Location for new Outlet of Chatime
The flagship store of Chatime was situated in Hurstville. It was found that more than 47.8% residents were Chinese. Chatime has more than thirty stores in the metropolitan area of Sydney. The major focus of Chatime is to penetrate the market by adoption of effective strategy. In order to identify the locations of additional Chatime outlets some major factors need to be considered. First of all, the population characteristics need to be analyzed (Kim and Park, 2013). The location of the new outlet must be surrounded by the population of East and South East Asian background, domestic as well as international students and young Asian Australian (Lee and Liao, 2009). Chatime has been competing for the market share. The situational factors also needed to be considered before choosing a location for opening an outlet of Chatime. The location must have a good exposure and easy access. The combination of these two factors is essential for the success of new outlet. In different part s of Asia, tea is one of the most popular leisure beverages (Paganini-Hill, Kawas and Corrada, 2007). It has been observed that the global demand for tea is rising. Chatime has majorly targeted the suburbs market due to the high concentration of the Chinese residents. It basically targets the consumers who are habitual decision makers and seeks convenience (Turhan, AkalÄ±n and Zehir, 2013). Hence, shopping centers, near to the movie theatres, food courts, train stations etc will be idea locations for Chatime to open a new outlet (Zhuang et al., 2006). The major reason is these places are convenient for the target market.
This paper has provided an insight to the current operations of Chatime in Australia. The SWOT analysis has demonstrated that Chatime has significant strengths which can be capitalized in order to ensure success of the organization. In order to overcome the weakness, the branding strategy of Chatime needs to be improved so that it can efficiently communicate with the target market regarding the health benefits of Taiwanese tea and its flavor. The demand for bubble tea is enhancing across Australia. The bargaining power of suppliers has estimated to be low. The intensity of competition is growing and the bargaining power of customer as well as threat of new entrants is high.
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