BHO3373 International Marketing: Chatime's France Market Entry

This report outlines Chatime's international marketing strategy for expanding from Taiwan to France, focusing on its tea products. It employs Hofstede's cultural dimensions to analyze cultural differences between Taiwan and France, and Porter's Five Forces to identify global competitors. The report provides strategic recommendations, including a modified pricing strategy and leveraging collectivism in business. It covers various aspects such as company overview, product nature, environmental justification for choosing France, competitor analysis, cultural profile, country of origin effects, market segmentation, target marketing, positioning, market entry strategies (specifically joint ventures), and the international marketing mix, concluding with tailored strategies for cultural adaptation in the French market. Desklib offers similar solved assignments and resources for students.

International Marketing

Executive summary
International marketing is the process which includes the performance of business
activities at international level for generation of higher profits. Further, it also involves the direct
flow of products and services to final users in one or more than one country. The current report
involves the expansion of Chatime from Taiwan to France by involving the tea products. In this
regard, Hofstede cultural dimensions has been applied to know about the cultural of host
country- France and home country- Taiwan for the growth tendency of Chatime. Apart from this,
Porter’s five forces analysis has been used for the identification of world level competitors.
Furthermore, strategic recommendations have been provided such as modified pricing strategy
and involvement of collectivism culture in business.

Table of Contents
1.0 INTRODUCTION.....................................................................................................................1
2.0 DESCRIPTION AND JUSTIFICATION COUNTRY RECOMMENDATION......................1
2.1 Overview of the company......................................................................................................1
2.2 Nature of the product.............................................................................................................1
2.3 Environmental justification for country.................................................................................2
3.0 COMPETITOR IDENTIFICATION.........................................................................................3
3.1 Major competitors..................................................................................................................3
3.2 Competitor’s analysis............................................................................................................3
3.3 Supportive evidence for growth.............................................................................................5
4.0 CULTURAL PROFILE.............................................................................................................5
5.0 COUNTRY OF ORIGIN, FOREIGN AND DOMESTIC CONSUMER PREDISPOSITIONS
.........................................................................................................................................................7
5.1 Country of origin...................................................................................................................7
5.2 Success of tea in France market.............................................................................................8
6.0 MARKET SEGMENTATION, TARGET MARKETING AND POSITIONING...................8
6.1 Market segmentation.............................................................................................................8
6.1 Target market.........................................................................................................................9
6.2 Positioning...........................................................................................................................10
7.0 MARKET ENTRY AND EXPANSION.................................................................................10
7.1 Marketing entry strategies...................................................................................................10
7.2 Joint Venture as the entry mode in France..........................................................................11
8.0 STRATEGIC RECOMMENDATIONS..................................................................................11
8.1 International marketing mix................................................................................................11
8.2 International marketing strategies........................................................................................12
8.3 Cultural adaptation in France...............................................................................................12
9.0 CONCLUSIONS.....................................................................................................................12
10.0 REFERENCES......................................................................................................................14

List of Tables
Table 1: Market segmentation for Chatime.....................................................................................8
List of Figures
Figure 1: Porter's five forces analysis..............................................................................................4
Figure 2: Comparison of France and Taiwan by Hofstede cultural model......................................6

1.0 INTRODUCTION
International marketing refers to worldwide scale of reconciling the global operational
differences, opportunities and similarities to meet the multinational objectives (Czinkota and
Ronkainen, 2013; Terpstra et al., 2012; Keegan and Green, 2015). It includes the application of
marketing principles which depends on the expansion of local strategies. Further, this can be
done with the help of the focus on the market identification, segmentation, targeting along with
international decisions. In this context, the current report is based on the expansion plan of the
Chatime; a Taiwan based company in the France with special reference to tea series. For this
purpose, cultural environment of the country has been analyzed and a complete marketing plan
has been prepared. Apart from this, competitors have been identified and strategic
recommendations have also been provided to achieve the purpose of the study. At the end,
several authentic references have been used such as journals, books and web sources.
2.0 DESCRIPTION AND JUSTIFICATION COUNTRY RECOMMENDATION
2.1 Overview of the company
Chatime is a Taiwanese global franchise tea house which is based on the generous
products such as bubble tea, fruit tea series, refreshing juice, smoothies and coffee etc. (Chatime,
2018). The company is specially dealing in the variety of tea series such as hazelnut milk tea,
strawberry Au lait, Pudding, butterfly pea with grapefruit juice etc. On the other hand, bubble
tea, tea and flavored tea are the special products of the Chatime café (Chatime, 2018). Further,
the company has adopted growth and expansion model through franchising at world wide level.
it has 1000 number of locations of tea stores in 80 countries (Chatime, 2018). It has been
globally operated the business-like United States and California and it has been expanded
business in various countries involving Malaysia, China, Korea, Canada, Indonesia, Philippines,
Australia, UK, India and New Zealand etc. The company has unique concept to offer tea a
healthier, refreshing as well as joyable alternative with coffee.
2.2 Nature of the product
Chatime offers the wide variety of products and use the less sugar in every product which
is healthy and fruitful for the body as per the texture. The company has unique concept to offer
tea a healthier, refreshing as well as joyable alternative with coffee (Chatime, 2018). Further, it
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also uses all-natural product for the preparation of the final product such as tea. In this regard, it
prefers the natural tea leaves for the development of new product range. At this juncture, the
current environment of consumers is demanding for the hygiene products due to health
consciousness. On the other hand, Chatime products are available with the variety of toppings
like pearls and mixture of QQ jelly, aloe vera, coconut jelly and red beans. Apart from this, the
café has unique identity of its brand over the products because some of the items are available
only in fewer countries. Further, Chatime also deals in the variety of drinks in which it offers the
ice level as per the requirement of customers (Foodgressing, 2018). Hence, it reflects that
products which are provided by the Chatime are healthy and offer the ingredients as per the
demand of the consumers because they have trust on the hygienic nature of the products.
2.3 Environmental justification for country
France is a European country and has been selected for the expansion of products of
Chatime café. The country would enter into French market with new product of tea with wide
variety of series. The country is surrounded by the various external factors such as political,
social and cultural, economical etc. which affects the business environment of the companies. In
this regard, France has been selected by Chatime café for the expansion of tea products on the
basis of following factors.
 Environmental factors- These factors have great impact on the new entrance business
entities because the commencement and growth of a company is based on the
environmental factors. The climatic conditions of France are better because it has mild
summers as well as cool winter seasons (Commisceo Global Consultancy Ltd, 2017). In
this context, it would be beneficial for the Chatime café to establish the store in France
because cold environment always demands for a hot tea. Coffee whereas hot
environmental conditions increases the demand for cold and iced tea. Moreover, the
respective café is offering both type of tea such as cold and hot as per the requirements of
consumers.
 Economic factors- As per the analysis, it has been found that France has 7th largest
economic power of the world and it is covering the economic crisis on a huge rate in
comparison to another European countries. Further, better weather conditions, high GDP
growth rate and less tax rates on business and flexibility in availability of workforce are
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helpful to achieve the set targets in the economy of France (Banco Santander, 2018). At
this juncture, the selection of France country for the Chatime café is fruitful to expand the
business because the organization has to pay fewer amount for taxation, labor would be
available easily etc.
 Cultural factors- Cultural environment of the France is a rigid in nature because it has
low possibility to avoid the risk and uncertainty which has great effects on the business in
France (Global alliance of SME’s, 2016). But after the 2nd world war, has taken initiatives
to invite the market investors for the business because it has wide variety of supplying
industrial, farming and agricultural products. In this regard, it can be beneficial for the
Chatime café to enter into France market because there would be easy availability of raw
material for the coffee and tea. Moreover, the company would be able to deliver the
series of tea at cost-effective price.
3.0 COMPETITOR IDENTIFICATION
3.1 Major competitors
Chatime is a beverage company which deals in variety of tea in all over the world. The
main attraction for customers is bubble tea but there is huge number of competitors of bubble
tea. For example, Chatime has outlet in Malaysia and got success in Taiwan style bubble tea;
however, there are many plenty of other tea outlets such as Orchado, share tea, Ding tea and
Gongcha has already exist in the Malaysia market (Hor, 2017). Apart from this, there are other
strong competitors of Chatime in world such as Peets Coffee, Dunkin brands, Starbucks, Kodiak
coffee etc. On the other hand, McDonalds, Ritual coffee roasters and Philz coffee etc. are strong
competitors for the Chatime in the beverage industry. Further, main competitors of Chatime are
Jenjon’s café, Pho Saigon Bay restaurant and Quicklyusa which has huge market share in the
entire beverage market (Owler, Inc., 2018).
3.2 Competitor’s analysis
With the help of Porter’s five forces analysis, competitive factors and competitors of the
beverage industry can be analyzed. It can be beneficial for the Chatime because the company
come to know about several external factors for the business which may affects in France.
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Figure 1: Porter's five forces analysis
(Sources: Rothaermel, 2015)
According to Porters model, it can be easy for Chatime to know about bargaining power
of buyers and suppliers, threat of new entry and substitute products in the entire market place.
 Threat of new entry- Chatime is a beverages company which is specially deals in the
variety of tea with the uniqueness in bubble tea even there are several competitors for
Chatime in respective industry. There is a threat of new entrance is high due to large
number of competitors such as Pho Saigon Bay restaurant, Jenjon’s café and Quicklyusa
etc. Further, it can be dangerous for Chatime to deal with competitors in France if they
offer cost-effective prices for the coffee and can grab the entire consumer market of
beverages. Hence, it turns to negative impacts on the profitability of Chatime because
market of France is big in size which increases the chances of new entrants.
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 Threat of substitute- By considering the huge number of competitors in beverage
industry, there is threat of substitute products is high in France market for the Chatime’s
Tea. For example, tea and coffee are substitute products for each other. In this context, if
Chatime enters into France market with high cost of tea then customers would not attract
to Chatime’s tea and remains stick to existing brands of tea. Even the customers have a
right to shift from tea to coffee, if coffee is available at low price than tea by competitors.
Thus, it reflects that there is higher rate of threat of substitute products in France for
Chatime by keeping in mind the several competitors.
 Bargaining power of buyers and suppliers- The buyer’s power in France market is
very high due to large number of customers in the market and availability of many
competitors. The consumers can bargain for the products by considering the competitors
tea series due to price sensitivity as well as differences between competitors. Besides of
these, Chatime is offering the low price and quality products of tea by involving white
pearls which is the plus point for the company to deal with competitors. On the other
hand, there is huge availability of suppliers for raw material of tea in France because
material is easily available so bargaining power of suppliers is low. There is possibility to
shift the Cahtime from one supplier to another if they supply the products at higher price.
3.3 Supportive evidence for growth
On the basis of analysis of statistical data of France, it has been found that organic food
and beverage industry is getting success and higher rate of growth in France market. In this
context, the market share would be enhanced to 9.49 billion $ by 2022 (Business wires, 2017)
The people are shifting from chemical drinks to organic beverages due to health conscious and
enhanced awareness towards products which in turns to preferences, change in customer’s taste
for organic products. Hence, Chatime can possess a competitive position in beverage industry in
next 5 years in terms of growth.
4.0 CULTURAL PROFILE
France is a developed country in all over the world along with large economies of scale.
The business culture of France is effective in nature because it is focusing on to continue with
the development of European union (King, 2012). In this context, cultural analysis can be done
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on the basis of Hofstede cultural dimension model which depends on the 6 major dimensions
such as power distance, individualism-collectivism, masculinity-feminist, uncertainty avoidance,
indulgence and long-term orientation (Nakata, 2009; Migliore, 2011).
Figure 2: Comparison of France and Taiwan by Hofstede cultural model
(Source: Hofstede insights, 2018)
Chatime is entering into France from Taiwan for the expansion of the business as per the
cultural environment. According to Hofstede cultural model, it has been analyzed that the power
distance of the France is higher than Taiwan. The culture of France is based on the western
culture whereas Taiwan related to eastern culture. The western culture has major emphasis on the
distribution of rights as well as powers to the people to enhance the confidence level (Hofstede
insights, 2018). In this context, it would be beneficial for Chatime to operate business in France
because the company would be able to delegate responsibilities to respective employees to
maximize the productivity of services (refer figure 2). On the other hand, cultural environment of
France is based on the individualism whereas Taiwan’s culture has more focuses on collectivism
because western countries has motive to work on individual basis rather than integration of
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people in one category. Moreover, eastern countries always perform the business activities with
involvement of entire organizational people (Naor, Linderman and Schroeder, 2010).
There is significant difference between France and Taiwan’s culture on the basis of
uncertainty avoidance. France does not consider the uncertainty for the business and low focuses
on the avoidance by continuing with further proceedings (refer figure 2). However, Taiwan
examine the risk factors of business before and after the operation because on the basis of risk
factors, organizations would be able to measure the market factors and level of profitability in
that specific market segment (Hofstede insights, 2018). Apart from this, the cultural environment
of France is surrounded by short-term orientations but Taiwan is based on the long-term
orientations. In this regard, France has individualism culture so it does not involve the family and
other people in the business activities whereas Taiwan has eastern culture that bound it to focus
on the family, relatives at the time of business considerations. Hence, it can be better for Chatime
to enter into France market because of low consideration of family and can produce the variety
of tea series as per the requirements of business as well as consumers.
On the basis of cultural environment, it has been found that the culture of France is
individualistic which is beneficial for the new entrance in the market place because the
consumers can be any type for the Chatime products such as tea. The consumer’s preference
would not be affected by the family concern because there is less involvement of family in any
concern which is valuable for the businesses.
5.0 COUNTRY OF ORIGIN, FOREIGN AND DOMESTIC CONSUMER
PREDISPOSITIONS
5.1 Country of origin
Chatime is a company of Taiwan and has a global chain of the teahouse which is based
on the culture of Taiwan (Chatime, 2018). Taiwan is a eastern country and associated with the
variety of cultural environment that affects the business in home as well as host country. For
example, Chatime is entering into France and both the countries have different cultural
environment such as eastern and western. In this manner, both are having the significant cultural
variations.
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5.2 Success of tea in France market
The success of tea in the France market is based on the consumer behavior and
perception towards the tea which is originated in Taiwan. In this regard, it has been analyzed that
Chatime is a well-established company at global level because tea business is operating in 30
countries (Chatime, 2018). The company has a created a brand image in the consumers mind in
context of offering the vide variety of tea along with quality products. Further, it has modernized
the tea series from traditional culture to updated version. It has adopted new machines to produce
the fresh tea, different flavors along with topping and fruits. This type of culture is helpful to
make Chatime different from competitors. At this juncture, the people of France would easily
accept the new series of tea which offered by Chatime because of international identification of
quality products. Although, the culture of France is totally different from the Taiwan because
people based on the higher acceptance of risk; however, Taiwanian does not accept the risk
factor on higher rate (Hofstede insights, 2018). Hence, it reflects that the customers of France
would be greatly affected by the eastern culture, perception and adaptability of the products and
would not resist to accept the changes in variety of tea.
6.0 MARKET SEGMENTATION, TARGET MARKETING AND POSITIONING
6.1 Market segmentation
Segmentation is the process of dividing the entire consumer market into different sub
parts for the products and services. Market can be segmented on the basis of geographic-regions,
country; demographic-age, income, gender, occupation; behavioral-occupations, usage rates,
loyalty status and psychographic factors- life styles, beliefs, values and personality (Wedel and
Kamakura, 2012). By considering the basis of segmentations, Chatime would divide the entire
France market on the basis of demographics.
Table 1: Market segmentation for Chatime
Particulars Description
Basis of
segmentation
Demographic
Age group 25-50 (Youth &
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