Market Potentiality of After You Dessert Café in China

This report discusses the market potentiality of After You Dessert Café in China, including external business factors, market entry strategy, customer buying behavior, competitor analysis, and marketing mix strategies.

Running head: INTERNATIONAL MARKETING
International marketing
Name of the student
Name of the university
Author note

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Executive summary
The aim of this report is to discuss about the market potentiality of After You Dessert café in
doing business in the Chinese market. After You Dessert café is a leading name in the market of
Thailand where they offer number of distinctive food items. In the recent time, they are intending
to enter in a foreign market and China is selected. In this report, the external business factors to
be faced in the Chinese market are being discussed. This included the political and legal factors
and the socio-cultural factors. From the analysis of the external environment of China, it is
identified that the major opportunity for After You Dessert café in doing business in the country
is huge market opportunities, while the major challenge will be the intervention of the
government in the business decisions. In accordance to all these factors, the market entry strategy
for After You Dessert café is selected. Green field investment is recommended due to the reason
that After You Dessert café cannot export their snacks items and franchising may cause
difficulties in managing the foreign business. While in the case of the green field investment,
they can have same business and operation approach in the new country as well. This report also
discussed about the customer buying pattern, product feature preferences and shopping habits of
the Chinese customers. In addition, the possible impacts of these factors on the business of After
You Dessert café are also discussed. Competitor analysis is also being done and it is concluded
that After You Dessert café will face high intensity of competition across different price levels.
The recommended marketing objectives are to increase the market share and product identity in
the new market. In accordance to these marketing objectives, segmentation, targeting and
positioning strategies are being recommended. It is concluded that After You Dessert café should
target the middle age customers due to their more adhere to new globalized culture. They should
position their products as more affordable and distinctive offerings in the market. In the
marketing mix strategies, all the elements are being elaborated and it is concluded that both the

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standardization and adaptation strategy should be initiated. It is also concluded that the product
strategy should have standardization and service approach should be localized in accordance to
the local cultures and preference patterns.

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Table of Contents
1.0 Introduction................................................................................................................................5
2.1 Determination of the socio-cultural environment......................................................................6
2.2 Determination of political and legal environment.....................................................................7
3.0 Market entry strategy.................................................................................................................9
4.0 International marketing analysis..............................................................................................10
4.1 Consumer buying behavior......................................................................................................10
4.2 Competitor analysis.................................................................................................................11
4.3 SMART objectives..................................................................................................................12
4.4 Marketing segmentation strategies..........................................................................................12
4.5 Targeting strategy....................................................................................................................13
4.6 Positioning strategy.............................................................................................................13
5.0 Marketing mix strategies.........................................................................................................14
5.1 Product.................................................................................................................................14
5.2 Promotion............................................................................................................................15
5.3 Distribution..........................................................................................................................16
5.4 Price.....................................................................................................................................17
5.5 People..................................................................................................................................17
5.6 Process.................................................................................................................................18
5.7 Physical evidence.................................................................................................................18

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6.0 Conclusion...............................................................................................................................18
Reference.......................................................................................................................................20

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1.0 Introduction
International business strategy is one of the major factors being considered by the
contemporary business organizations. This is due to the reason that in the current time, business
organizations should have to look out for potential foreign markets in order to gain more market
share and sales revenue. However, in selecting the potential foreign market, there are number of
factors and elements should be considered ranging from the potential opportunities to the
probable risks (Penrose, 2017). In addition, it is also important for the business organizations to
design their market entry strategy in accordance to their business and product strategy and in
accordance to the target market situations. Thus international business strategy should be
implemented on the basis of different factors. In the recent time, the majority of the trend of
business organizations entering in the foreign markets is from the developing countries (Henisz
& Zelner, 2015).
After you dessert café is one such organization from a developing country. They are
based in Thailand and founded in 2007 with only one outlet. Currently they are having more than
10 branches across the country and created a favorable brand image (afteryoudessertcafe.com,
2018). They are mainly known for their distinctive items such as Shibuya honey toast and figgy
pudding. In addition, the ambience and the quality that they offer are also distinctive and unique.
Thus, it is a good time for After you dessert café to look out for potential foreign country to
expand their business. China is being selected due to the immense market opportunities available
in the country.
This report will discuss about the international business strategy for After you dessert
café in entering the Chinese market. This report will discuss about the external factors that will

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be faced by them in doing business in China. In addition, the market entry decision and
marketing mix strategies will also be discussed.
2.1 Determination of the socio-cultural environment
China is one of the earliest and oldest civilizations with rich heritage. China is
traditionally a communist country with having one party rule and number of restrictive policies.
However, in the recent time, the restrictive policies are reducing and are becoming more market
oriented. However, the geographical location of China is favorable with having the border with
Russia also acting as the gateway to the ASEAN countries (Yang & Martinez-Zarzoso, 2014).
Folk religion is the majorly followed religion in the country followed by Buddhism. China is
having diverse climate due to vast region. This ranges from extreme winter to summer in desert
and monsoon. China is also having the one child policy. This refers to the policy of having only
one child per family in order to curb the rise in population. Thus, the future market potentiality
may get limited for After you dessert café.
According to the report of global competitiveness index, China is having the ranking of
38 in terms of quality of primary education. This denotes that primary education in China is
having favorable quality. Though this factor is not having direct impact on the business of After
you dessert café but the more quality primary education will help in creating favorable business
environment. China is having the ranking of 29 in terms of overall education system (Global
competitiveness index, 2018). This refers to the fact that the average quality of education system
in China is high. Thus, the more favorable will be the education system, the more will be the
market opportunities for After you dessert café. This is due to the reason that quality education
will lead to more employment and will increase the purchasing power of the customers. In

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addition, education will also increase the awareness among the customers about the concept of
café that will increase the products for After you dessert café.
Another major advantage that will be gained by After you dessert café in operating in
China is less influence of religion. China is a communist country and thus atheist values are
being promoted and this will help After you dessert café to not having religious influence on
their offerings. China is also having rich visual arts and music. Thus, if After you dessert café
can use these arts in their store ambience, then the customer attractiveness will get increased. In
addition, with the recent emergence of foreign investments in the country, customers are
becoming more aware about the foreign brands (Jacka, 2014). This can help After you dessert
café to market their products in the Chinese market. However, it should be noted that Chinese
language is the widely used in the country and it is important for After you dessert café to change
their branding and Chinese specific website in the Chinese language. It should also be noted that
China is having more collectivist culture. According to the Hofstede’s cultural dimensions,
China is having score of 20 in terms of individualism. Thus, After you dessert café should have
their offerings that are accepted collectively in the society. In their home market, After you
dessert café is more catering to the individual customers for having some quality time. However,
in the Chinese market, they should offer more holistic experiences (Chhokar, Brodbeck &
House, 2013).
2.2 Determination of political and legal environment
Political factors will also have extensive influence on the business operation of After you
dessert café in the Chinese market due to the reason that change in the political factors along
with change in the rules and regulations will have impact on business. As discussed earlier,

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China is having one party rule and thus the change in political scenario is less. However, the
socialist approach of government will have adverse impact on the business operation due to the
reason that in China, government is having influence on the business decisions (De Villa,
Rajwani & Lawton, 2015). One of the major political advantages for After you dessert café in
doing business in China is stability in government. China is not having any incident of coup in
the recent time. According to the global competitive index, China is having the ranking of 49 in
terms of the intellectual property rights. This denotes that After you dessert café can have
effective legal framework in protecting their intellectual property such as trade mark and patent
(Luo & Zhao, 2013). However on the other hand, the major challenge for After you dessert café
is the burden of government regulation. This is due to the reason that in the global
competitiveness index, it is reported that China is ranked at 18 in terms of the burden of
government regulation. Thus, After you dessert café may not have the free traded economy in the
Chinese market as they have in Thailand (Li & Qian, 2013). Some of the laws such as company
law of People’s Republic of China should be followed by them. In addition, the food safety law
should also be followed due to the reason that After You café is the operating in the food sector.
In terms of the efficiency of legal framework in settling disputes, China is having ranking
of 45. This ranking denotes that After you dessert café will have moderate intensity of the legal
framework. In addition, China is also having the issue of high taxation rate and tariff rate. China
is having the ranking of 118 in terms of the tariff rates and this denotes that After you dessert
café will face higher rate of tariff (Global competitiveness index, 2018). It is also concluded that
one of the major problems of doing business in China is their higher rate of taxation. Therefore,
though After you dessert café will face number of opportunities in doing business in China but
the major challenge for them is the influence of the government.

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Figure: 1
Problematic factors in doing business in China
Source: (Global competitiveness index, 2018)
3.0 Market entry strategy
There are number of market entry strategies available for After you dessert café in
entering in the Chinese market. One of the major market entry strategies that can be initiated by
them is franchising. This refers to the process of appointing a third party vendor to look after the
operation in the Chinese market (Marie Doherty, Chen & Alexander, 2014). The third vendor
party will run their business under their brand name and will pay royalty. This strategy can be
beneficial for them by providing the opportunity to have fewer risks and fewer responsibilities.
However, in this case, After you dessert café will not have the direct control over the operation
and this may affect their service standard. On the other hand, export option is not applicable for
them due to the reason that they provide services (Wei et al., 2014). Another option available for
them in entering in the Chinese market is the green field operation. This refers to the direct
investment in setting up the operations in the foreign market. The major advantage that can be

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gained by After you dessert café from green field operation is having entire control over their
foreign operations. In addition, this can also help in having more brand identity due to have
physical presence in the foreign market. However, in this strategy, they will have to take more
risks in terms of investments (Kang & Montoya, 2014).
It is concluded that After you dessert café should implement green field operation in the
Chinese market. This will help them in competing with their competitors more effectively. In
addition, having the direct physical presence in the Chinese market will also help them to
determine the taste and preference pattern of the local customers effectively (Ashraf & Herzer,
2014). Risks can be reduced in the direct investment by offering the services in accordance to the
local market trend. However, Incoterms will not have the requirements due to the reason that no
international transactions will be taking place for After you dessert café. Incoterms are more
applicable when any products are transported from one country to another (Bergami, 2013).
4.0 International marketing analysis
4.1 Consumer buying behavior
Services to be offered by After you dessert café are not necessity for the customers but it
is more of luxury. Thus, After you dessert café will have the disadvantage of having lower
preferences for the customers. In addition, the product use pattern is more periodic due to the
reason that customers will not visit café on a daily basis. However, if the product strategy can be
modified and adopted in accordance to the Chinese market trend, then the product use patterns
can be made more frequent (Malik et al., 2013). It is recommended that other than their signature
products, After you dessert café should also offer products that will have more daily usage. This
will increase the product use pattern. Customer shopping habit for the café and restaurants are

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based on loyalty and level of satisfaction. Thus, it is important for After you dessert café to
maintain the customer satisfaction (Forbes, 2013). However, the recent impact of the
globalization and increasing average income of the customers is enhancing the customer
preferences for the café and restaurants.
4.2 Competitor analysis
China is having large number of cafés around the world and mainly concentrated in and
around the metro cities. Some of the high end cafes are Moleskine Café, Joseph and Vivienne
Westwood café. In addition, global brands such as Starbucks are also present in the Chinese
market (Chen & Miller, 2015). There are number of smaller brands also operating in the Chinese
market such as yong café, central park, biking café and Alba café. Thus the intensity of the
competition will be more for After you dessert café in doing business in China. In terms of the
competition, After you dessert café is also trailing behind the competition due to the reason that
they are relatively new brand in Thailand and about to enter in the Chinese market (Mion & Zhu,
2013). On the other hand, global players such as Starbucks and well established players in the
Chinese market are having more brand value compared to After you dessert café. Moreover, the
product portfolio of the brands already operating in the Chinese market are having Chinese
specific offerings, while After you dessert café is having limited offerings and not specific to
China. In terms of the pricing, After you dessert café will not compete with Starbucks and
Joseph, rather they will compete with Yong café and central park. Moreover, the packaging and
promotional strategy are also being designed considering the Chinese trend (Shah, Ahmad &
Ahmad, 2013). Thus, After you dessert café should redesign their packaging and promotional
strategy in order to compete with the Chinese rivals.

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4.3 SMART objectives
 To acquire minimum 5 percent market shares in the Tier I cities of China within the first
3 years.
 To be in the top 50 known brands in China within the 3 years.
 To have the presence in the entire tier I cities within the next 3 years by market
expansion.
4.4 Marketing segmentation strategies
The market segments for After you dessert café will be identified on the basis of
demographic, behavioral, personality and lifestyle. In terms of the demographic segmentation,
age groups between 18 and 35 will be targeted. This is due to the reason that middle aged
customers will be more attracted towards the café culture. In addition, café culture will get
matched with the lifestyle of the professionals and students from this age group. In addition, the
secondary target market will be customers above the age of 35 and 50. This age group will be
targeted because there are large of portion of the adult customers who prefer café for leisure and
hanging out (Kolb, 2013). In terms of the behavioral segmentation, customers with having the
needs of homely atmosphere in café along with having affordable rates will be targeted. After
you dessert café will be able to cater these customers by offering services at affordable rates. In
terms of the personality, customers with having updated lifestyle ad fast moving life will be
targeted (Cuadros & Dominguez, 2014). This is due to the reason that professionals working for
corporate are having schedule. These customers will be offered with homely and soothing
environment. In addition, the customers with active lifestyles and having the interests for new
tastes will be targeted by After you dessert café with their new age services.

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High price
Low price
High
distinctiveness
Low
distinctiveness
After You desert café
Joseph
Vivienne Westwood café
Starbucks
Central park
Yong café
4.5 Targeting strategy
Market targeting strategies should be initiated by following the product differentiation
strategy. This is due to the reason that in the Chinese market, competition is already intense in
both mass market and premium market. Thus, offering differentiating and distinctive products
will help After you dessert café to attract the customers over their competitors (Liu & Zhang,
2013). In addition, After you dessert café is already offering unique products in their home
country. Thus, it will not get difficult for them to initiate the same strategy in the Chinese market
also.
4.6 Positioning strategy
The products of After you dessert café will be positioned as affordable and with
distinctive taste and variants. Positioning as an affordable alternative, more customers can be
targeted and taste based positioning will help to stay separate and unique among the competition.

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Figure: 2
Positioning map for After you dessert café
Source: As created by authors
5.0 Marketing mix strategies
5.1 Product
The major value proposition for the products of After you dessert café will be their
distinctiveness in terms of new food offerings and their taste. Thus, this can help in offering
unique products that cannot be served by the local brands (Bocken et al., 2013). In addition, the
service including the store ambience will also be designed in line of existing stores of After you
dessert café. This will also help to portray a distinctive approach that cannot be offered by the
local brands. The food to be offered by them will not be innovative but it will be a one of a kind
experience for the Chinese customers. However, the major problem will be level of acceptance
among the customers due to the reason that not all the offerings will match the taste of the local
cultures. It is recommended that After you dessert café should have standardization strategy for
their products due to the reason that they are known for their existing items (Hussain & Khan,
2013). However, the service approach can be localized in accordance to local cultures. Branding
strategies should be local due to the fact that global culture and Chinese culture are different in
nature. Brand name should be kept same but it can be advertised in Chinese fonts and texts.
However, Chinese market is known for duplicate and counterfeit products but the strategy of
distinctive products and taste will help in fending off this issue.

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5.2 Promotion
Currently, After you dessert café follows intensive promotional strategy such as offering
seasonal and time based discounts such as sweet tooth offer for a certain time in a day. They also
follow social media marketing strategy in order to have lower cost of promotion. It also helps
them to gain positive word of mouth (Ashley & Tuten, 2015). In the case of the Chinese market,
same strategy should be initiated due to the reason that After you dessert café will start their
business in small format. In addition, in the initial stage, more focus should be given in gaining
customer loyalty. The advertising approach should be adapted in line to the Chinese trend. The
objective of the promotions will be the same but the approach should be different (Tiago &
Verissimo, 2014). Facebook and twitter are primarily used in Thailand but in the Chinese
market, Weibo is having maximum coverage and this social platform will be used. Slogan will
be giving authentic Thai taste in affordable price. However, print advertisement will not be used
due to the reason that theme of café will not match with that of print media.

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Figure: 3
Media penetration in Chinese market
Source: (monitor.icef.com, 2018)
According to the above data, online media is witnessing the increase in demand
compared to the traditional media. Thus, choosing of the social media marketing will help After
You Dessert café to reach out to maximum customers.
5.3 Distribution
Distribution will be in national stage due to the reason that local sourcing of the materials
will be given more focus. This can help After You Dessert café to gain cost leadership. Thus, the
usage international freight and logistics are not applicable for them. The suppliers will be

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responsible for the logistics and it will help After You Dessert café to have less responsibility.
However, home delivery systems will be provided to the end customers and it will be done by
their own (Visser, Nemoto & Browne, 2014). After You Dessert café will have own fleet of
delivery vehicles for delivering the orders.
5.4 Price
Price of sourced materials will determine the price of the end products for After You
Dessert café. In addition, the intensity of the substitutes in the market will also determine by
actual price (Guo et al., 2013). However, the currency of China is having more valuation than
Thailand and thus the return on investments for After You Dessert café in their home currency
will be more. All the transactions with the customers and suppliers in the Chinese market will be
done in Chinese Yuan in order to have less risk of currency fluctuations.
5.5 People
Localization strategy will be initiated in having human resources in the Chinese market
for After You Dessert café. This is due to the reason that though the products will be the existing
ones, but the service approach should be made adaptive in order to attract local customers. Thus,
polycentric staffing should be initiated in order to have local employees in place (Yoo, 2015).
These local employees will be the best to offer the service in accordance to the local culture.
They will be given training about the organizational approach and how to deal with different
customer types. The employees will be trained in order to have the proper knowledge about the
business.

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5.6 Process
Process is an important part for the operation of After You Dessert café. This is due to the
reason that effectiveness of their backstage activities including the kitchen will determine their
business potentiality. In this case, standardized approach will be followed including the same
recipes, same processes, and same ingredients and will have geocentric approach of staffing
(Plakhotnik et al., 2015). This will ensure that employees from the home country will help the
employees of the host country to have right standard and benchmark of the offerings.
5.7 Physical evidence
Physical evidence of the stores of After You Dessert café will be similar to that what they
are in their home country. This will help them to maintain the same approach and it will also
help to position their brand as an authentic Thai brand. Customers will be able to relate it more
efficiently when After You Dessert café will have same approach in both home and host country
(Prashar, 2013). The store artifacts will be minimal to offer a simplistic environment to the
customers. In addition, the store ambience will also be maintained as more homely atmosphere
rather than as traditional food outlets. Staffs will also have causal dressing over the formal wears
to maintain the homely atmosphere. Seating arrangements will include same layout of tables and
chairs as they are in their home country.
6.0 Conclusion
Thus, it can be concluded that Chinese market is having huge opportunities as well as
challenges for After You Dessert café. In this report, the external environmental factors are
discussed with the help of the global competitiveness index. This denotes that After You Dessert
café will have huge market opportunities in China and challenges in terms of the intervention of

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the government. However, the pro business approach of the government of China will be
beneficial for After You Dessert café to invest and operate in the Chinese market. This report
also concluded that green field venture will be more applicable for After You Dessert café in
entering in the Chinese market. This is due to the reason that the products offered by them are
not suitable for exporting and franchising will cause more challenges for them. The consumer
buying behavior and shopping habits in the Chinese market are also discussed along with the
competitor analysis. This report recommended about the segmentation strategies and the
marketing mix strategies in accordance to the factors identified. The discussion on the marketing
mix strategies concluded that both the standardized and adaptive approach should be initiated in
order to have the maximum outcome. Discussion on the marketing mix also concluded that
products should be offered same to the existing offerings of After You Dessert café but the
service approach should be adopted in accordance to the Chinese cultures.

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