Marketing Strategy and Plan

This report discusses the marketing strategy and plan for expanding business in the Russian market. It includes a value analysis, PEST analysis, and Porter's Five Forces model. The report also covers segmentation, positioning, and targeting strategies for Chatime tea company.

Marketing Strategy and Plan

Executive summary
The international expansion of the brand is the imperative aspect which influence
corporation to deal with the several types of issues which affect the margin and overall rate of
return. In this context, corporations seek for the lucrative options available in the external
environment which facilitates to derive the valid outcome with the increased rate of return. For
this purpose, the current report discover Russia as the most effective market for Chatime to
expand in the new market. In this regard, product development strategy would be effective where
the business with its variety of drinks will be entered into the new market. Here, it has been
suggested that corporation can use the cost-leadership and differentiation marketing strategy as
the firm would target different segments whereby it gets easy to target the potential market with
the increased rate of return.

Table of Contents
1.0 INTRODUCTION.....................................................................................................................1
2.0 VALUE ANALYSIS.................................................................................................................2
3.0 ANALYSIS UNCONTROLLABLE FORCES.........................................................................3
3.1 PEST (Political, Economic, Social and Technological) analysis of Russia..........................3
3.2 Porter’s Five Forces model....................................................................................................4
4.0 SEGMENTATION, POSITIONING AND TARGETING.......................................................6
5.0 GROWTH STRATEGIES.........................................................................................................8
6.0 MARKETING COMPETITIVE STRATEGIES.....................................................................11
7.0 CONCLUSION........................................................................................................................12
8.0 REFERENCES........................................................................................................................13
List of Figures
Figure 1: A model of value chain analysis......................................................................................2
Figure 2: Porter's Five Forces model...............................................................................................5
Figure 3: Ansoff's Growth Matrix.................................................................................................10
1.0 INTRODUCTION
Marketing strategy is a long-term and forward-looking approach to planning with the
inclusion of stated goals achievement and get sustainable competitive advantages (Hawkins and
Mothersbaugh, 2010; Baker, 2014). In this context, the current report is based on the preparation
of a strategic marketing plan in the context of the expansion of business in the Russian market.
For this purpose, Chatime tea company has been selected to expand the business. Here, different
models such as value chain analysis, Porter's five forces, PEST (Political, Economic, Social and
Technological) analysis has been applied to analyze the market. Furthermore, appropriate
segmentation, positioning, targeting has been done and accordingly Ansoff's growth strategy has

been used. At the cost leadership and product differentiation strategies has also been applied for
the Chatime products.
 Objectives of the marketing plan- To analyze the competitive market of selected
location Russia to expand the business of Chatime.
 Overview of the Chatime- Chatime is a Taiwanese global and largest teahouse franchise
in the world which operates in 38 countries along with 2500 outlets. The company
provides different types of products such as Bubble tea, Flavored tea, Mousse, Smoothie,
energetic drink, Coffee, Milk tea etc. which relatively contains less sugar. The company
operates businesses in the US, Japan, India, Canada etc. Furthermore, the revenue of the
company is around 20 million US$ as per the census of 2011 (Cha time, 2019).
 The justification for market selection (Russia)- Being an international brand; Chatime
has covered wide geographical areas such as the Philippines, Thailand, South Korea,
China and India etc. However, some markets like Russia are still untapped but it has
enormous growth potential. Here, the rationale behind the selection of Russian market is
the high demand for coffee and people are economically strong which are keen towards
healthy drinks and tea etc. (The Dynamic Coffee Culture in Russia, 2015). Further, the
Russian market is a politically stable and strong market which is supportive for Chatime
or any new business. Thus, the selection of the Russian market is justifiable for Chatime.
2.0 VALUE ANALYSIS
The study of both types of activities supports in reducing the cost for the firm. Here, a
value chain analysis has been done in the context of Chatime for expansion of the business-

Figure 1: A model of value chain analysis
(Source: Yuan, Shen, Hao and Lu, 2011)
Primary activities include inbound, outbound logistics, operations, marketing and sales,
and delivery of services (refer figure 1). In this context, Chatime has a strong inbound logistics
because it has better relations with suppliers who provide the raw material on time in the
required quantity and quality (Cha time, 2019). However, there is an issue in the supply chain
management because of the risk and uncertainty of weather which causes a delay in supplying
the materials. In this condition, Chatime has to pay a significant amount to suppliers even the
quantity and quality do not match the standards (Melanie, 2018). Nonetheless, the company
adequately stores the inventory to reduce the risk and issues of the supply chain. Apart from this,
Chatime has attractive packaging activities which support in creating value for the products
(Howarth, 2018). Here, outbound logistic of Chatime is efficient because the company delivers
the products in both ways as online as physical stores to attract a large number of customers.
Besides this, marketing and sales activities are attractive because it uses specific taglines such as
fresh love, international branding strategy to influence the customers due favorable cost and
command over the brand image (Cha time, 2019).
The value of the products increases with the help of the support services instead of
primary services because it includes the procurement, infrastructure, technology development
and human resource development (refer figure 1). In this context, the procurement procedure of
Chatime is better because it has strong relations with suppliers and purchases the raw material

for different types of tea on time (Pikri, 2017). On the other hand, Chatime uses cloud computing
technology like Microsoft Azure and Windows 8 in the business operations in Malaysia which
helps to enhance the business operations (Paramasivam, 2016). Moreover, Chatime also focuses
on the development of the workforce to provide the innovative and attractive products to the
customers at a global level. Besides this, Chatime offers different types of rewards and perks to
the employees for building a healthy relationship. Here, for productive services, the company
welcomes the former employees who help the management to take the assistance of those staff
(Azahar, 2018). Moreover, the company spends a lot of financial resources on the establishment
of franchise stores in different locations to leave a brand image in the international market (Pikri,
2017). It reflects that the entire value chain of Cha time is appropriate and useful because it
focuses on all aspects which help to create the value of the products and services.
3.0 ANALYSIS UNCONTROLLABLE FORCES
3.1 PEST analysis of Russia
 Political factors- Russia is a politically stable country which attracts a large number of
investors to speculate the money in different business sectors (LeBlanc, 2014). Moreover,
the Gross Domestic Products (GDP) rate is higher in Russia which is continuously
increasing and supportive for the investors. Furthermore, the country allows for the
Foreign Direct Investment (FDI) to expand the businesses in Russia which further helps
to accelerate the Russian economy (Kuznetsov, 2012).
 Economic factors- Economic factors and economic development in Russia are stable.
However, FDI supports the economy to increase the capital outflow in the country
(LeBlanc, 2014). It is a 4th largest agricultural region which is beneficial for drink and
beverages industry (Economy of Russia, 2001). Furthermore, is the availability of skilled
labor is higher in the ratio which directly affects the productivity of the companies.
 Social factors- Social environment of Russia is supportive for the beverages industry
because people have a high demand for coffee and tea (The Dynamic Coffee Culture in
Russia, 2015). However, the Russian market is highly affected by alcohol poisoning
which increases the interest of people towards healthy coffee and tea which are healthier.
Besides this, high living standards of people influence the customers to make expenditure
on the desired product and services.

 Technological factors- Russia is a technologically expert and more upgraded country
which is continuously associated with rich technological advancements. People have a
higher tendency towards the science, Chemistry, aerospace engineer who contributes to
the technical development of the country. Furthermore, modernization has taken place in
the production of another new coffee brands which supports to supply chain (Global
Coffee Report, 2016). It seems that production of coffee may rise in Russia because of
the use of IT embedded technologies to produce higher quality and quantity of coffee.
By considering the PEST analysis, it has been found that the Russian market is suitable for
the Chatime to expand the business because all factors are favorable. The stability in political
and economic factors are supportive for Chatime to produce innovative tea range in the
country.
3.2 Porter’s Five Forces model
Figure 2: Porter's Five Forces model
 Competitive rivalries- The people in Russia are coffee and tea addicted which is a plus
point for the established as well as new companies to expand the business with a variety
of tea and coffee flavors. Here, Maharaja and Nargis are two significant competitors in
Bargaining power of
buyers (High)
Exiting rivalries
(Moderate)
Bargaining power of
suppliers (moderate)
Threat of substitute
(moderate)
Threat of new entrants
(moderate)

Russian market although there are local brands also like Grand, Orimi and Mayi tea is in
the Russian market who are possessing rule over the entire market (The Economic Times,
2015). It shows that competitive rivalry for the Chatime is moderate where it will have to
enter with different strong tea flavors into the Russian market and compete with
competitors.
 Bargaining power of buyer and suppliers- There is a number of suppliers in the
Russian coffee market by considering the demand of consumers towards coffee. Two
major tea plants supply the raw material as tea and coffee beans, leaves etc. to the
producers (Waaijer, 2014). However, the Chatime offers the bubble tea and other variants
which require specific suppliers for the respective market. In this manner, the bargaining
power of suppliers is moderate where business might have to pay a higher cost in the
supply chain which leads to an increase in the overall price of the product. On the other
hand, the bargaining power of buyers is also higher in the Russian market because of the
availability of a considerable number of competitors and the availability of substitute
products. Moreover, price sensitivity is too high in the Russian coffee market because of
rivalries posses’ different prices on the different brands.
 The threat of new entry and substitute- On the basis of economic factors, it has been
identified that economic conditions of Russia are stable and people are ready to accept
the new brans in coffee and tea because Russian's are addicted to tea and coffee
(Economy of Russia, 2001). Hence, the threat of new entry is moderate in the Russian
market because there is more chance of rivalries to enter the Russian market. So, the
position of Chatime might be affected in the future due to new arrivals. Here, to reduce
the threat of new entry in the Russian market Chatime can enter with cost-effective
pricing of tea products to cover the market area. Besides this, the risk of substitutes is
also moderate in Russia because of the availability of strong competitors in the coffee
market who are offering the products at higher quality at favorable cost (The Economic
Times, 2015). Here, the buyers have a high power to shift other brands to avail the
benefits of the least cost. However, the Russian consumers are ready to pay a higher
amount for innovative and unique products. Thus, there is an opportunity for Chatime to
enter with an innovative range of tea along with healthy products for health-conscious
buyers.

4.0 SEGMENTTAION, POSITIONING AND TARGETING
 Segmentation- Consumer market is segmented on the basis of four categories such as
Geographic- area, region, city; Demographic- age, education, occupation, religion,
income level; Psychographic- personality, attitude, life style and consumer behavior
(Wedel and Kamakura, 2012). In this context, Chatime will segment the market on the
basis of demographic factors to attract a large number of consumers. For this purpose, all
age groups people will be considered because Chatime will enter with a specific range of
tea which will include tea for kids as smoothies and healthy tea as sugar-free for the
youngster and health-conscious consumers. Apart from this, the Russian market will also
be segmented on the basis of geographical basis to cover the entire consumer market of
Russia.
Basis of Segmentation Age groups Justification
Demographic
segmentation
All age groups- kids, the
youngster
Chattime will provide
various tea products for
kids and youngsters who
are more conscious about
health. Here, the Russian
people are more interested
in tea and coffee (Global
Coffee Report, 2016).
Hence, there might be an
opportunity for people to
prefer less sugar added
products.
Geographic segmentation Nearby shopping mall and
colleges
Most of the consumers
gather near the selected
areas which would be
helpful for Chatime to
attract the number of
customers
 Positioning- Positioning strategies used by the organizations to escalate in the selected
areas to compete with rivalries. Different types of positioning strategies like product
characteristics, pricing strategy, quality etc. adopted to position or establish the product
and services in the market place (Adina, Gabriela and Roxana-Denisa, 2015). Here, the

concerned company Chattime will prefer the product characteristic or consumer benefits
positioning strategy to position the tea products in the Russian market because
positioning is one of the critical factors to create an identity of the company in the new
market. In this context, Chattime will display all the information regarding a wide range
of tea products with the help of the product characteristics as healthy products for both
kids and youngster. Furthermore, variety and quality of products will be the prime focus
since the bubble tea and different variants of the coffee as well as tea are fomous for
Chatime. Here, the products will be segmented by keeping in mind consumer's benefits to
be in the new Russian market by focusing on the cost-effective pricing so that all medium
and higher income level consumers can prefer. However, the competitors are providing
the coffee and identified tea brand in the Russian market; hence, Chatime has an
opportunity to enter with a different range of tea which is preferable for all age groups
consumers. In this context, consumer benefits or product characteristics strategy would
be justifiable for Chatime because the company will provide the information regarding
quality, innovations such as smoothies and less sugar added products etc.
 Targeting- Targeting is the strategy which is used by the companies for the selection of
the potential customers of the company where they will be available (Lynn, 2011). In this
context, Chatime will be able to identify and attract the number of customers with the
help of the target market for the new products in the new market of Russia. Here,
Chatime will select the target market as nearby shopping malls and colleges because most
of the consumers found in these particular areas. In this context, Chatime will prefer
differentiated targeting marketing to attract both types of segmented consumers as kids
and youngster. Here, Tv advertising will be used by Chatime for kids so that parents can
watch about healthy products as smoothies. Further, for youngster variety of tea would be
provided because of weather conditions and health consciousness to the target market
will prefer the tea products of Chatime. Here, initially, cost-effective pricing will be used
by providing the small packet with the inclusion of all nutrients for the health of kids. But
gradually, the price will increase since the quality of the products is very good. Apart
from this, online marketing will be used to be aware of the youngster about different
healthy tea products of Chatime.

5.0 GROWTH STRATEGIES
Based on Ansoff's growth matrix, four types of strategies such as market development,
market penetration, diversification and product development are adopted by the organizations to
be competitive in the market as follows (Hussain, Khattak, Rizwan and Latif, 2013)-
 Market development- Market development strategy is used by the companies to enter
into new markets with existing products and services which are already established in
different countries or locations. In this context, Chatime can enter into new Russian
market with existing products as Bubble tea, smoothies, healthy tea and coffee etc. to
cover the entire consumer market.
 Market penetration- Market penetration is one of the growth strategies which is
preferred by the companies to elaborate the business in the existing market along with
existing and available products and services (Baker, 2014). In this context, Chatime can
also use the market penetration strategy to expand the business in different existing
markets by using the different branding strategies to compete with competitors.
 Diversification- Diversification strategy is preferred by the companies to expand the
business in new markets with new products to be an international brand entity. Here,
Chatime can use the diversification growth strategy to enter into Russian market by
including the variety of new products such as healthy smoothies for kids, youngsters and
old age people to be competitive in the new market. However, to enter into the new
market with new products can be risky because it might be possible that buyers not
keenly prefer the new products. Hence, diversification can be less adequate for Chatime
for the Russian market.
 Product development- Product development is the strategy to be in the existing markets
with innovative and new products to grow the business (Toften and Hammervoll, 2011).
In this context, Chatime can also prefer the product development strategy by introducing
different types of new products as healthy tea, coffee, smoothies, milk tea, juice,
icecreams, new fruit tea series etc. in the existing markets where it is already established.
However, it can not be beneficial for Chatime because the company cannot interact with
other locational consumers and merely focus on the existing market.

Figure 3: Ansoff's Growth Matrix
(Source: Toften and Hammervoll, 2011)
Based on above-mentioned growth strategies, it has been analyzed that all strategies are
beneficial to expand the business but these are based on that the company wants to be in the
existing market or to expand into new markets. In this context, Chatime will use the market
development strategy to grow the business in Russia but it will enter with existing product range
instead of developing new products in tea range. Furthermore, the rationale behind the selection
of market development strategy is that Chatime already has a wide variety of tea products such a
bubble tea, smoothies, pearl tea, milk tea, ginger tea, healthy tea with less sugar added et. which
are helpful to attract the new customers (Chatime, 2014). The strategy will be beneficial for
Chatime because the company is focusing on market development besides product development
because it is going to expand in a new market with available products. Here, Chatime is
emphasizing on selling of the same products in the Russian market as an international market.
Apart from this, the company will use different strategies like Tv advertising and online strategy
for target customers as kids and youngsters in Russia.

6.0 MARKETING COMPETITIVE STRATEGIES
There are different types of marketing strategies such as cost leadership, product
differentiation, niche marketing etc. as per the product characteristics and market area (Datta,
2010). Here, Chatime will use both marketing strategies like cost leadership and product
differentiation to establish the products in the Russian market.
 Cost leadership strategy- Cost leadership strategy is one of the competitive marketing
strategies which are used by the companies to position the products and services at low
cost in the market to achieve competitive advantages (Datta, 2010). Here, Chatime will
use the cost leadership strategy at the initial stage to establish in the new Russian market
because there are already competitors available in the market. Furthermore, the company
will put the low cost strategy to introduce the kid's products at the starting stage because
buyers will not prefer the new tea products at higher price and consumers will stick to
existing brands. However, the company will not put the excessive low cost; otherwise,
the company will not be able to stay in the competitive market because the profitability
will decrease. In this manner, with the help of the cost leadership strategy Chatime would
be able to target the average customers as well as high-income groups buyers and create a
brand identity in the Russian market.
 Product differentiation strategy- Product differentiation strategy helps the
organizations to keep our products and services differentiated from other competitors in
the market. Differentiation can be in the form of quality, features, pricing, services after
sale etc. (Boehe and Cruz, 2010). Here, Chatime will prefer the product differentiation
strategy to present the tea products in the Russian market uniquely. The company will
offer wide variety of tea products such as milk tea, juice, ginger tea, bubble tea, healthy
products for babies, youngsters and old age people (Chatime, 2014). Further, the Russian
people are more addicted to tea and coffee; therefore, strong competitors are available in
the Russian consumer market like Maharaja and Nargis are the strong competitors and
Grand, Orimi and Mayi are the local brands of tea and coffee (The Economic Times,
2015).

7.0 CONCLUSION
On the basis of the report, it has been concluded that environmental analysis is essential
to identify the potential of the market. In this context, the Russian market has been found
appropriate for Chatine to expand the business with existing products to get competitive
advantages. Further, based on Porter's Five forces model it has been found that the level of
competitive rivalries is high in Russia as well as higher bargaining power is there in suppliers
and buyers. Apart from this, market development strategy will be used by Chatime to enter into a
new market of Russia which will be beneficial to cover the entire consumer market.

8.0 REFERENCES
Adina, C., Gabriela, C. and Roxana-Denisa, S., 2015. Country-of-origin effects on perceived
brand positioning. Procedia Economics and Finance, 23, pp.422-427.
Azahar, W., 2018. Chatime welcomes former employees affected by the Tealive injunction.
[Online]. Available at: < >. [Accessed on 10 April 2019]
Baker, M.J., 2014. Marketing strategy and management. Macmillan International Higher
Education.
Boehe, D.M. and Cruz, L.B., 2010. Corporate social responsibility, product differentiation
strategy and export performance. Journal of Business ethics, 91(2), pp.325-346.
Chatime, 2019. Cha time- about us. [Online]. Available at: <>. [Accessed on 10 April 2019]
Chatime, 2019. Cha time. [Online]. Available at: < >. [Accessed on 10 April 2019]
Chatime, 2014. Products and services. [Online]. Available at: < >. [Accessed on 11 April 2019]
Datta, Y., 2010. A critique of Porter's cost leadership and differentiation strategies. Chinese
Business Review, 9(4), p.37.
Economy of Russia, 2001. Russian Economy: Industry, Foreign Trade and Natural Resources.
[Online]. Available at: < >. [Accessed on 10 April 2019]
Gereffi, G. and Fernandez-Stark, K., 2011. Global value chain analysis: a primer. Center on
Globalization, Governance & Competitiveness (CGGC), Duke University, North Carolina, USA.
Global Coffee Report, 2016. Coffee production on rise in Russia. [Online]. Available at: < >.
[Accessed on 10 April 2019]
Hawkins, D.I. and Mothersbaugh, D.L., 2010. Consumer behavior: Building marketing strategy.
Boston: McGraw-Hill Irwin,.
Howarth, B., 2018. What makes the Chatime brand tick with consumers. [Online]. Available at:
< >. [Accessed on 10 April 2019]

Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and
growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-
206.
Kuznetsov, A., 2012. Inward FDI in Russia and its policy context, 2012, Russia GDP Annual
Growth Rate 2015. [Online]. Available at: <>. [Accessed on 10 April 2019]
LeBlanc, B., 2014. Russian Foreign Direct Investment and Tax Havens. [Online]. Available at: <
>. [Accessed on 10 April 2019]
Lynn, M., 2011. Segmenting and targeting your market: Strategies and limitations.
Melanie, 2018. Three Key Supply Chain Challenges for Coffee Roasters. [Online]. Available at:
<>. [Accessed on 10 April 2019]
Paramasivam, S., 2016. Chatime’s Bubbling Success with Microsoft. [Online]. Available at: <>.
[Accessed on 10 April 2019]
Pikri, E., 2017. 6 Reasons Bryan Loo Emerged As The Hero Of The Chatime Malaysia Rebrand.
[Online]. Available at: >. [Accessed on 10 April 2019]
The Dynamic Coffee Culture in Russia, 2015. [Online]. Available at: <>. [Accessed on 10 April
2019]
The Economic Times, 2015. Demand for Indian tea rises in Russia, traders want joint ventures
with Indian cos. [Online]. Available at: <>. [Accessed on 11 April 2019]
Toften, K. and Hammervoll, T., 2011. International market selection and growth strategies for
niche firms. International Journal of Entrepreneurship and Innovation Management, 13(3-4),
pp.282-295.
Waaijer, W., 2014. Tea Brews Big Business in Russia. [Online]. Available at: < >. [Accessed on
11 April 2019]
Wedel, M. and Kamakura, W.A., 2012. Market segmentation: Conceptual and methodological
foundations (Vol. 8). Springer Science & Business Media.

Yuan, H.P., Shen, L.Y., Hao, J.J. and Lu, W.S., 2011. A model for cost–benefit analysis of
construction and demolition waste management throughout the waste chain. Resources,
conservation and recycling, 55(6), pp.604-612.