Max Brenner
Entry Strategy
Main Objectives
Short term: Max Brenner’s short-term objective is to enter the Chinese market with our chocolate bar concept in Shanghai while creating brand awareness through introducing our new chocolate culture. Our strategy will be to maximize brand awareness by the end of the first year in order fulfil our long term ambitions.
Long term: Creating brand awareness in Shanghai will aid us to strategically maximize our market share for our target segment. For further future ambitions, we aim to expand operations into Eastern China by accepting franchising options while building brand awareness in our markets.
Entry Concepts
Our team believes it is crucial to enter with a concept that can maximize initial awareness and sales, while keeping risks at a minimum. Currently, Max Brenner prefers entering into Asian markets with the new chocolate bar concept, which is evident in Singapore and Japan. The chocolate bar concept concentrates its offerings just on chocolate desserts, while the restaurant includes other options like pizzas, sandwiches and hamburgers. Though both concepts deliver and provide a clear message of our chocolate culture, the restaurant is more risky due to its high initial costs and higher operating costs.
Also, 51% of the survey respondents prefered the chocolate bar concept. We will therefore use the same fast casual model strategy used in other countries, by taking customer orders at the counter while introducing product adaptations to the Chinese market through the bar concept.
Our restaurant concept was the second choice from our marketing research. The bar concept will be used to create initial awareness for a year and then leveraged through establishing a restaurant in the second year. This will help us to cope with projected increasing demand and establish the full chocolate culture. Additionally, we will introduce our service innovation in our restaurants.
Although this represents a higher cost, our market research reflects a high potential demand in Shanghai which we predict will increase annually, enabling us to cope with the high investment.
In addition, 12% of the respondents prefered online selling. Since the percentage is low compared to other concepts, we decided to postpone online selling strategy when entering Chinese market. In the long term, using online channel is going to be our strategy since there is significant increase in online sales in China.
Max Brenner entry locations
The consumers popular choice for a chocolate bar was in Lujiazui. Based on our analysis on human traffic flow in the area, it will be best to place our bar inside the Super Brand Mall in Lujiazui. This allows us to capitalize on the traffic flow as well as enable us to use our scent marketing to attract customers.
The restaurant will be placed at in Xintiandi. Our research gave us strong incentives to do so since students, expats, and tourists are commonly attracted to this area.
Pricing strategy
From our research, we have decided to enforce product-quality leadership, meaning we will position our brand as an affordable luxury brand.
According to our interviewees, our chocolate bar products and environment appeared luxurious.They also perceived that our price range would be between 100 and 300 RMB. Contrarily, we have used a much higher figure for our financial projections.
Our product is fairly price inelastic since many perceive it as luxurious. There are also few competitors in the market delivering the same quality and experience as us. Thus increasing our price setting power. Our competitors were also considered in our pricing decision. For example, Godiva is seen as a relatively more premium brand while Awfully Chocolate is seen as less premium in comparison. With this in mind, we price ourselves slightly lower than Godiva and higher than the latter. Furthermore, we benchmarked China against countries like Australia, Japan, the US and Singapore taking into consideration import duties, CPI, GDP and per capita income. We concluded on higher pricing compared to Australia. We will use price endings methods, meaning that most of our price tags will end with an odd number. This is because customers see an item priced at 29.95$ to be in the 20$ rather than the 30$ range. For example, we would price our hot chocolate at 34.95 RMB, chocolate fondue at 109.95 RMB and the chocolate pizza (full size) at 95.95 RMB.
These prices may seem to be high, but our survey showed that even students are willing to pay at least 100 RMB for our chocolate experience.
Promotional pricing will be introduced by following the same strategies we apply in other countries, like providing special priced products and promotional coupons during events like Valentine’s day.
Current Prices
