Tasmanian Mountain Waters is an Australian company, based in Tasmania. The company exclusively sells bottled mineral water across Australia and plans to extend its business globally to increase its international presence. The companyaims to retain the pureness and natural quality of the bottled water which is collected from remote springs of freshwater in Tasmania. Tasmania with its plentiful supply of freshwater that is rich in various minerals offers a very high quality of the packaged drinking water with ideal amounts of minerals and pH value, making the water very healthy and natural.Focus on the high quality of the water is one of the important strategic goal of the company that helps it to stay ahead of its competitors in Australia. The company has seen a significant growth in the last few years as a result of which the company aspires to extend its global presence (Tasmanianmountainwaters.com.au, 2018).
The decision of the company to extend its operation to China has been supported by the enormous growth and market potential in China. Since the year 2000, there has been an increased demand for bottled water in China and currently China is the largest market for bottled water (agr.gc.ca, 2018). As of 2014, the market value for bottled water in China reached USD 14 billion, far exceeding the market value of USD 1 billion in the year 2000 (Zhao et al., 2014). The market is expected to grow by 12% 2025 thereby providing an ample opportunity for Tasmanian Mountain Waters to develop its business in China. The growth in the ‘bottled water’ market in China can be attributed to factors such as poor quality of water available from the taps, economic growth and an improved awareness towards health among Chinese people (Vieux et al., 2017; Liu et al., 2016).
This study aims to analyze the different environmental factors that can influence the marketing campaign of Tasmanian Mountain Waters in China and propose recommendations that can help to address these factors and thus ensure success of its marketing campaign.
Different environmental factors that can influence the marketing campaign:
West et al. (2015) and Mcdonald (2016) pointed out that it is important to study the environmental factors such as economic, political, socio-cultural and technological factors that can have a significant impact on the marketing process in order to develop an effective marketing campaign that can work in a given location.Understanding these factors can also help to identify the various marketing challenges and develop strategies to overcome them (Chernev, 2018). Discussed below are some of these environmental factors that should be considered by Tasmanian Mountain Waters in order to develop its marketing campaign in China.
According to Castaño et al. (2015) in order to have an edge in the market one must understand the economic factors involved and strategically make marketing approach. This will help to have a clearer understanding on the economic risks and the sustainability in the market involved and ultimately help the future success of the company both locally and globally (Hsieh, 2015).
China being the second largest economy of the world with approximately USD 9.2 trillion, this growth of economy has a huge advantage for the market of bottled mineral water (Economics, 2015),. Currently the packaged water market in China is a multibillion dollar industry which is expected to rise upto 16% by the end of year 2025 (Husna, 2016). There was also a significant drop of unemployment rate between 2013 and 2017 (state.gov, 2018). With the increasing GDP, the demand for goods and imported products has also increased quite significantly. This market demand has given the Tasmanian Mountain Waters a good opportunity to thrive in the Chinese market (Jin et al., 2018). The economic growth of China has resulted in rapid development of the consumer market of China attracting several international players. This has also increased the options for the general consumers as they can now choose products from local or international companies (Jin et al., 2015). With the rapid increase of skilled employment in China along with the increase of GDP the citizens can now have easier access to imported products; this is the key focus for making marketing strategies for Tasmanian Mountain Waters.
The economic growth has also increased tourism in the country, making China the fourth most visited country in the world after France, USA and Spain and receives almost 57 million international tourists every year and is second in the world in its contribution towards national GDP (943.5 billion USD or 9.4% of GDP) (Fang et al., 2016; Tsang et al., 2015). This shows that the tourists spend a significant amount of money in China. The international tourists also do not prefer the tap water available in China due to concerns regarding water quality and hence primarily depend on packaged drinking water (Xu & Reed, 2017). Studies show that a large number of tourists, especially from North America, Europe and Australia show preference towards packaged water that assures the best quality and hence provides a significant opportunity for Tasmanian Mountain Waters by targeting the marketing campaign towards the international tourists (Tsang et al., 2015; Xu & Reed, 2017).
Financial aspects such as costs of marketing, pricing of the products, costs of giving discounts, organizing campaigns and promotional events and hiring professionals should also be considered in the marketing strategy in order to develop a holistic idea about the marketing campaign and estimate the profitability from these activities (West et al., 2015).
Unlike the economic factors which is in favour for Tasmanian Mountain Waters, the political aspect of Chinese market is very much unfavorable, It has been pointed out and protested against by many western companies in the past on how Chinese policies favors local brands and companies. Chinese government has implemented such policies in attempt to lower competition between Chinese companies and western companies which can be termed as discriminatory in nature (Wójcik, 2018). Such political policies can have a severe effect on marketing and growth of the company in the Chinese industry. Such discrimination along with inefficient implementation of Intellectual property rights and struggle towards licensing can cause added barrier for Tasmanian Mountain water in the Chinese market against its local competitions. The main critique about such unfair policies are those of not being clear for the investors with inconsistent legal rights which are forced almost arbitrarily, these are the major challenges Tasmanian Mountain water needs to overcome in order to make a solid stand in the Chinese market (Herrmann-Pillath et al., 2014).
However the recent Bilateral Investment Agreement between the Chinese and Australian government to increase foreign investment in their country can help Tasmanian Mountain Waters anchor a position in the Chinese market with their “premium quality water” products, also to be noted that the Chinese government has changed some policies which favors foreign investment which can be advantageous for the growth of the company in Chinese marke (Ewert, 2016).
China’s culture can be analysed using the Hofstede Cultural Dimensions score. This is a framework that is made up of 6 levels, each consisting of diametrically opposing values such as ‘High Power Distance Vs Low Poer Distance, ‘Collectivism Vs. Individualism’, ‘Feminity Vs.Masculinity’, ‘High Uncertainty Avoidance Vs. Low Uncertainty Avoidance, ‘Short Term Orientation Vs. Long Term Orientation Vs.’ and ‘Restraint Vs. Indulgence’ (Hur et al., 2015; Glava et al., 2018). Each country has been evaluated based on the scores on each dimension that helps to understand the cultural dimensions of those countries, the results of which can be found on hofstede-insights.com. Discussed below is the score for China:
Power Distance: 60 (which implies the country follows a hierarchal structure and everyone knows their place in the society), Individualism: 20 (which implies that China does not have an individualist society but instead follows a collectivist one), Masculinity: 66 (which implies that the society highly values achievements, heroics, assertiveness and likes material rewards for success), Uncertainty Avoidance: 30 (which implies the society’s attitudes towards new things and ideas are more relaxed), Long Term Orientation: 87 (which implies that the society has a pragmatic approach and supports progress in education and thrift to progress further), Indulgence: 24 (which implies that society is restraint and does not exhibit indulgence and suppresses gratification through strict social codes) (hofstede-insights.com, 2018). The hierarchal structure of the Chinese society can be helpful for the company to maintain its organizational structure and maintain its power at the top. The collectivist mindset can help in the marketing approach be supporting the efficacy of mass communication and mass marketing. The masculine nature of the society can also be useful due to the materialistic orientation of the people which also includes preference for high quality as a result of which the market provides a good opportunity for high quality mineral water, packaged by Tasmanian Mountain Waters. Moreover their long term orientation can also help to support the long term sustainability of the company. However, it should also be noted that China is not an indulgent culture unlike many other western countries and has strict codes of social conduct and socio-cultural norms. Tasmanian Mountain Waters should have a strong awareness of the norms and cultural competencies in order to ensure the success of its marketing campaign (Glava et al., 2018, 2018).
The fast passed technological growth in China has paved its way to the top technological hub globally. With the rapid economic growth and skilled employments Chinese citizens has embrace technology in their day to day lives. The combination of technology availability and economic growth has helped China innovate newer and better technologies which can help Tasmanian Mountain Waters in their marketing strategies, with the help of various social media marketing and getting real time feedbacks Tasmanian Mountain Waters can grow its industry far quicker than it would have been possible a few years before (Kogan et al., 2017).
This availability of technology can be strategically used by Tasmanian Mountain Waters advertise and market its products to a far wider audience much faster. We have seen a huge growth in technology in China over the decade and the cost of labor combined with locally manufactured technological products has given China the biggest advantage to keep growing and be the superior technologically advanced nation globally. This growth of technology is a boon for a foreign investor as it provides a quick access and a solid platform to market its product and is cheaper than it would have been without such technological access (Wirtz & Lovelock 2016).
Chinese citizens are far more competent technology compared to other nations which means there are more skilled professionals. This is an added benefit of Tasmanian Mountain Water because it can provide a faster and more effective marketing growth and better product development by having better and faster data analysis systems. This can also help the company to understand the market conditions and predict future market dynamics based on which Tasmanian Mountain Water can monitor and assess the marketing strategies (Kogan et al., 2017).
The technology advances can help the company reach more audience through their company websites which can be accessed via various computerized medium and mobile devises easily. The website can also be effectively designed depending on marketing trends and needs. Reaching a wider audience using technological advances can significantly boost the marketing process, allowing the company to increase the brand awareness and thus the market penetration (Wirtz & Lovelock 2016).
According to the above mentioned analysis and research it can be concluded that Tasmanian Mountain Waters has a good opportunity in the fast paced growing Chinese market. The inaccessibility of good quality packaged drinking water combined with the social growth of the citizens with health awareness has given a gateway for Tasmanian Mountain Water a marketing advantage in China. With its premium water with high quality minerals and fresh spring water has put Tasmanian Mountain water among the top market share holder in China, with over a billion liters of water packaged every year in Australia. China being one of the biggest economic nation provides Tasmanian Mountain water a great platform to grow its industry even more. The demand of premium products and goods has significantly increased among the Chinese middle class and high class citizens with high health conscience. This demand in the market is the perfect opportunity for Tasmanian Mountain Water to provide quality packaged drinking water to the Chinese market. However the challenges that needs to be overcome are the bias trading policies by the Chinese government which restricts investors and unfair legal policies which can be problematic for Tasmanian Mountain Water
In order to overcome the marketing challenges Tasmanian Mountain Water can focus on these following points while developing its marketing campaign in China:
- Marketing Healthy products: Focusing the advertising of the products towards health beneficial will help Tasmanian Mountain Water thrive in the already health conscience product demand by the Chinese citizens.
- Targeting the right section of people:Tasmanian Mountain Water should target the middle class and upper class citizen as they have more buying power and are generally more inclined towards healthy imported goods and products
- Marketing its exotic value: Tasmanian Mountain water is highly attractive as it is from the high Tasmanian mountain springs with natural minerals and freshness, such exotic products are hard to find in Chinese markets even among the local competitor. Capitalizing on its exotic nature will give Tasmanian Mountain Water an upper hand in the market.
- Focusing on its “premium” value:The packaged water industry is over a billion dollar market in China itself. Focusing on its “premium quality mineral water” value can have an added advantage for Tasmanian Mountain Water to thrive in the Chinese market.
- Using technological advancements in its marketing strategy:China being one of the most technologically advanced nation has access to various online social platforms which can be used by the company to market its products and reach a higher consumer audience.
- Marketing it as a wellbeing of the general public:The recent economic growth of China has increased awareness among its citizens to be more health conscience with what they eat or drink. Such things can be capitalized by the Tasmanian Mountain Waters to have an advantage in the market
- Providing promotional products to tourism:Capitalizing on the tourism industry by providing complimentary products can not only increase the awareness of the products but also help harness consumers from another rapidly expanding tourism industry.
- Having a good brand ambassador: Likely a local brand ambassador so that the Chinese citizens can relate to it better, providing huge promotional sponsorships etc.
- Top quality product manufacture: As mentioned earlier Chinese market in packaged water lacks exotic quality just because Tasmanian Mountain Water is from the high mountain spring water with natural minerals, such qualities are hard to mimic by the compotators and gives an advantage.
- Developing local tie-ups: Tie-ups with local companies in China can help Tasmanian Mountain Waters to overcome the political barriers that can affect the marketing campaign. Tie ups can also help to gain favorable reaction from the regulatory authorities and thus can be advantageous to the business and improve the competitive advantage of the company.
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