1. Executive summary

Tsui Wah, as the market leader of Hong Kong Cha Chaan Teng industry, has extended its

business to the mainland; however, the performance of Tsui Wah in mainland is not really satisfying

indicated by the annual report. Facing strong competition in price and brand image from Tai Hing, Tsui

Wah walk on the edge of an aging Cha Chaan Teng market in Hong Kong. While geographic expansion

can be an outstanding choice for Tsui Wah to avoid the competition, Tsui Wah have yet found a way to

establish popularity among mainland consumer groups due to lack of strategies to manage food

consumption attitudes in China.

Majority of the middle and upper class of citizens in mainland are under the heavy pressure from

both work and environment and are longing for a place and moment to escape from the stressful city

life. Teaway, a tailor made product to satisfy this increasing demand and help with Tsui Wah’s

expansion in mainland , will be introduced in this report. It refers to premium tea shop that targets the

upper­middle segment and differentiates in offering high quality tea and the relaxing atmosphere. The

unique experience of dining away from all the noise, pollution and stress will be delivered to every

customer through the innovative construction, best tea, dim sums and services.

Based on the clear market objectives and positioning, industry analysis and competitor analysis

are conducted to prove the potential of the market and the feasibility of Teaway. The SWOT analysis

will also be applied to figure out the important external and internal factors that could affect the launch of

Teaway. Implementation plan and recommendation will then be given with the insights from Teaway’s

4P analysis. A detailed promotion plan will also be introduced to facilitate the launch of Tsui Wah

Teaway. At last, a concrete budget plan will be provided to show the cash adequacy and profitability of

the whole plan.

Supported by the comprehensive situational analysis and the optimal recommendation, Teaway

is going to help Tsui Wah seek great fortune in the mainland market.

2. Introduction and Current Situation

With more than 50 years’ development, Tsui Wah has grown from a small Ice Cafe in Mong

Kok to the No.1 Cha Chaan Teng chain in HK.

Hong Kong

It can be observed from the Annul Report (2013) that Tsui Wah has developed steadily in

Hong Kong with a continuous revenue growth in the past few years. However, with more than three

thousand Cha Chaan Teng in HK, the growth potential is quite limited. A report released by Frost &

Sullivan in 2011predicted that the whole revenue of Hong Kong Cha Chaan Teng industy will increase

by 90 billion from 2012 to 2016, however, only 1/9 of it is contributed by high­end Cha Chaan Teng,

where Tsui Wah belonging to. So we can see that the future growth in this industry is mainly from the

middle­end Cha Chaan Teng, which will make the industry more competitive and bring more pressure

to Tsui Wah .

Mainland China

In recent years, Tsui Wah has paid more attention to the potential catering market in Mainland

China. It opened its first Cha Chaan Teng in Shanghai in 2009. After listed on SEHK as the first

company in Cha Chaan Teng industry in 2012, Tsui Wah has opened six more cateens in Mainland.

Taking advantage of Tsui Wah’s good reputation and high quality food, the expansion should be

a success. But it turns out that the company isn’t doing well enough.

Revenue from External Customers

2013 (Million

HKD)

Hong Kong Mainland

Total revenue 870 203

Quantity 24 7

Revenue per

restaurant

36.25 29

Since the potential customer amount and the floor space are larger in China, the revenue per

restaurant should be higher than that in HK given the similar dish price. Frost & Sullivan’s report also

shows that Tsui Wah didn’t do well in Mainland market. Compared with other top Cha Chaan Teng

chain companies (e.g Tai Hing) in China, the yearly revenue of Tsui Wah is relatively low. The low

revenue shows people’s low acceptance to traditional Tsui Wah mode.

As mentioned above, with the limited growth space in Hong Kong market and less profitable

mode in mainland, Tsui Wah needs to adjust according to customers’ different demand in order to be

the leader in Cha Chaan Teng market.

3. Customer demand analysis

Due to the development of economics and increasing number of middle class in China,

especially in the big cities like Shanghai, customers ask for more than the food taste and quality.

Taking Shanghai as an example, according to a survey conducted by Shanghai Normal

University in 2012, 36.2% of Shanghai people think they have a heavy living pressure, while 55.7%

think that the living pressure, which is 91.9% in total. At the same time, air pollution is a threat of living in

big cities. With the growth of middle and upper class in China, people are requiring the quality of life and

looking for a place in busy cities where they can enjoy their peaceful meal have a real rest and separate

themselves from the noisy and stressful life for a period of time.

In a conclusion, the current Tsui Wah Cha Chaan Teng in mainland, which is noisy and

encourages fast eating, cannot satisfy customers’ needs for peace and relaxation.

3.1. Current Mainland Customer Analysis Through out the years, Tsui Wah has accumulated a large group of loyal Hong Kong customers.

The publicity of Tsui Wah in Hong Kong international airport and key tourist locations often create the first impression for Cha Chaan Teng when foreigners think of Chinese food. However, the brand image for Tsui Wah in the mainland market is much lower because the restaurant chain has yet know a way to capture the customers. Unlike Hong Kong customers who needed speed and efficiency, mainland customers are more focused on the enjoyment, price and quality of food. Through research, we come up with three key distinction between Mainland customers and Hong Kong customers. Based on these differences, we believe Teaway will be our ideal new product.

3.1.1. Dine out habit

The paces of dinning for Hong Kong locals are significantly faster than the one for Mainlanders. The key difference lies in the attitude toward food. Hong Kong people are used to good quality dishes that passed multiple food exam before catered to them. Food safety in Hong Kong is assumed, especially in reputable food chain like Tsui Wah. Hong Kong locals pay less attention to quality and more toward taste and ingredients. However, in mainland, food safety can not be assumed. According to Food Safety report published by Sustanalytics in 2012, majority of Chinese food distributors had low

rating in investment, exposure or prepareness. From the years of degrading experience from dinning out, mainland customers lack the excitement for new restaurants, especially Chinese restaurants chain. Mainlander avoid eating out as often as possible, which makes the food business so difficult. Yet, drinks and dessert house have flourished in the past few years. Perhaps, eating small promotes the belief that little amount can be tolerated. 3.1.2 Consumer social class

As a labor manufacturing site, most mainlanders lived a life which their wages are minimum to their survival. Since 2010, food costs in China far exceeded consumer level. Unlike Hong Kong where most people get lunch from local restaurants to save time, mainland labors try to save money by cutting dine out. Compare to Hong Kong, only middle high or high class mainlanders have the time and money to visit their favorite restaurants during lunch or afternoon. With the adequate income and social statues, these customers demand for recognition and tailor made products. Therefore, the deal choice rests on theme restaurants. Tsui Wah menus target for both low end and high end customers, which dilutes its image into mass marketer.When the high end mainland customers seek for a nice meal, Cha Chaan Teeng comes to near the bottom of the list. Knowing Tsui Wah has limited brand recognition and popularity in mainland, it needed another product that can enter less mature market in the cafe industry. 3.1.3 Diversity in taste

In a more cultural homogenous society, Hong Kong Cha Chaan Teeng reached success through creating a type of food every Hong Kong people like. While Hong Kong has its unique food culture and life style which foreigners feel obligated to fit in, major cities in mainland china also contain large amount of foreigners who maintained their own life style and mainly come for work. Therefore, according to the Food and Diet section of the Chinese Culture value report published by diversicare sinch 2006, there exist a large variety of taste and food expectation for what consider to be Chinese food. Adjusting the menu or taste for each customer is virtually impossible for large food chain, which put Tsui Wah Cha Chaan Teng in a vulnerable position. While most Chinese have perception on food, Tradition Tea and tea pastries, on the other hand, can be less familiar because they are not served as commonly. Utilized this fact, Tsui Wah can rethink and modern Chinese Tea culture. 1. Industry analysis Cha Chaan Ten industry is one of Hong Kong's typical industry which enjoys high popularity but low profit space due to fierce competition and geographical restrict. Tsui Wah company mainly focuses on Cha Chaan Ten business in Hong Kong in the past few years and now engaging in Mainland China market but having problems in making large profit due to the following Cha Chaan Ten industry current situation. At the same time, the forecast of Tsui Wah Teaway can be witnessed. 1)From the overlook of Chinese market China has the worlds' largest population and is biggest food consumption country. Catering industry is always the nucleus of Chinese retail sales of social consumer goods. It makes gross profit of 2,000 billion in 2011, which takes the percentage of 11.3% in the whole consumption of Retail sales of social consumer goods. In November 16, 2011, the Department of Commerce released "Guiding opinions during the twelve five" to promote the scientific development of the catering industry, which points out that the catering industry should withhold the annual 16%

increment speed and reach 3,700 billion in 2015. So that the current catering industry in China is quite optimistic and is suitable for Tsui Wah to enter in with the support of policy. However, the Cha Chaan Ten industry takes not high percentage in China's ctaering industry. Cha Chaan Ten is a traditional Hong Kong catering form and haven't enter Mainland Chinese market for a long time. So we witness the following disadvantages in its running pattern. ①Most of the Cha Chaan Ten, including Tsui Wah, in Mainland market choose to carry on the traditional Hong Kong form of catering, which doesn't suit the Mainland market that well. Because of the first impression, it aggravates the difficulty for the subsequent Cha Chaan Ten to change the existing image of Cha Chaan Ten in the customers. ②The menu of Cha Chaan Ten is comparatively dull and without many change, which may gradually leads to the loss of customers. ③Cha Chaan Ten doesn't have fixed cutomers in Mainland China as a exotic and therefore the income is not fixed to a steady level. Connecting with the fact that our Tsui Wah Cha Chaan Ten doesn't make success in Mainland market in the past few years, it's not a good idea for us to continue expanding in Mainland market by Cha Chaan Ten establishments. However, recently, with the development of China's average personal income and people's requirement of living, the growth of people's consumption towards green and healthy food and drinks is also growing rapidly. As a result, the tea market is keeping optimistic under the condition of world financial depression and inflation. According to Institution of Finance and Trade Economics, Chinese Academy of Social Science, Chinese tea market index is 106.27 and 105.11 in 2010 and 2011, which hold steadily upon 100 and therefore implies the energy of Chinese tea market. As the main carrier of tea consumption, tea house and our Tsui Wah Teaway which sell tea as a main service, also enjoys optimistic expectation. In current Chinese market, there are 5 points supporting us. ①There is a tendency of this industry due to the demand of the product and the shortness of professional staff and technology of management. ②The market is large with not much competitors and there is no leading establishment so that it's relatively easy to enter this industry. ③The cost of running an establishment like this will not be high and therefore lower the risk of losing. ④The space of profit is quite large. ⑤There is no need for too much administration and after­sell work. At the same time, our Tsui Wah Teaway has a unique advantage in the Chinese market which is combing traditional Chinese tea with traditional Hong Kong tea culture and may attract more customers under the condition of international culture combination. 2)From the speed of consumption growth According to reports by the Department of Commerce, we witness a steady grow in Chinese catering income. However, the percentage of whole consumption of Retail sales of social consumer goods is going down in the past three years.

This implies that under the high growth pace of Chinese average income and consumption, the catering industry is faced with growing pains comparing with other social consumer goods. From this point of view, ignoring the supporting policy, it will not be wise for Tsui Wah to enter the catering market in the form of Cha Chaan Ten, which is a fast food dining, faced with the fierce competition from other local catering industry. On the contrary, it will be a good choice to enter the market in another form as a service of beverage and cold drink. On the one hand, this can enjoy the financial support from the policy. On the other hand, this avoids the market saturation. Considering the idea of Tsui Wah Teaway, since the speed of Chinese tea consumption development is faced with a quite embarrassed situation due to the growth of tea consumption is 10%­20% in the past few years while the production growth of tea in China is 48% for cultivation and 76% for output, which causes severe imbalance. However, this may be a good news for our Tsui Wah Teaway because the over production of row material implies low cost of purchasing. At the same time, the growth of teahouse is not rapid with the high­speed growth of need for tea and teahouse culture consumption.

1.1Buying Patterns The buying pattern now in Tsui Wah Cha Chaan Ten is in a form of casual dining, which mainly attracts customers by the convenience and food taste. However, this may not be regarded as advantages in Mainland market. The reasons are that people in mainland don't eat out as frequently as Hong Kong people and they may not be able to completely get used to Hong Kong style fast food. Also, Tsui Wah Cha Chaan Ten don't offer the take­out service, which doesn't suit the habit of Mainland office workers, which are the mainly target customers of Tsui Wah Cha Chaan Ten. However, this situation can be improved a lot by offering the Tsui Wah Teaway establishment. The major reason for the customers to return to our Tsui Wah Teaway is great tasting tea, considerate service and pleasant atmosphere. Although, tea and sum dims consumption is uniform across different income segments, we will price its product offerings competitively. We strongly believe that selling tea or dim sums with a great service in a nice setting will help us build a strong base of loyal clientele. Besides, as a characteristic, Chinese tea culture combing with Hong Kong tea culture will be a great attractive point.

1.2Producing Patterns The producing pattern of Tsui Wah Cha Chaan Ten in Mainland market is to have a fast line of production with the existing combination of menu, which is not competitive enough with the assault of other local chain fast food catering establishment with high variety of dishes. Also, the row material of Cha Chaan Ten dishes come from foreland, which causes difficulties for establishment in inland to get materials in low price and high frequency. Also, the fresh degree will be influenced. However, the similar predicament will not happen in Tsui Wah Teaway.

The main target we plan to achieve in producing is to reduce the cost and higher the produce efficiency. As reported, tea in China is mainly produced locally. However, there are different tea producing area and different kinds of tea row materials which can be highly diversified so that the choice of materials is crucial. Considering tea as not only a kind of drink but also a symbol of identity and culture, we need to solve the problem of ensuring the quality of our tea and make it a way of reducing cost. On the other hand, we need to attract high­end customers, so that it's also necessary to buy high­grade materials. Due to the over­production of tea as stated before, it's efficient to buy in tea farmland with low price and therefore further lower the cost. Lastly ,the decoration of the shop should be adapted with the position of the target customers.

4.Competitor analysis

Tsui Wah is facing severe competition in both mainland and HK.

4.1Tsui Wah, as the market leader of Cha Chaan Teng industry in HK, is having a hard time to keep its

leading position. The top 10 Cha Chaan Teng chains especially Tai Hing is challenging Tsui Wah’s

position (See appendix). Tsui Wah and his major competitor Tai Hing’s performance will be

compared in the following three aspects.

4.1.1 Profitability

With the highest turnover rate and the average price, the performance of Tsui Wah’s average Cha

Chaan Teng is satisfying. However, this great advantage is diluted by the high proportion of operating

cost and the small number of Cha Chaan Tengs. Tai Hing on the other side is expanding rapidly and the

total revenue of its two core brands has exceeded Tsui Wah.

4.1.2 Portfolio

Tsui Wah focuses on the Cha Chaan Teng market and has already becomes the market leader with

almost one third of the market share. Since the Cha Chaan Teng industry in HK has long been in the

mature period with more than 3000 restaurants sharing the limited pie, Tsui Wah may not have much

potential in this industry. However, Tsui Wah’s competitor Tai Hing has a more diversified portfolio.

Instead of traditional Cha Chaan Teng, it also offers hot pot, sushi, barbecue and a wild variety of foods

under different sub brand.

4.1.3 Reputation

Tsui Wah has actually won a lot of reputation and has better rating than Tai Hing and other competitors.

However, the good reputation hasn’t been used well. Tai Hing pays more attention to the promotion

and the story of Tai Hing’s history and high quality food can be through a lot of magazines, newspapers

and new media. Tsui Wah aims to attract the customers directly and does not spend a lot on promotion.

According to the survey on Cha Chaan Teng industry in HK, more than 60% of citizens regard Tai Hing

as the No.1 Cha Chaan Teng in HK.

Another important issue that Tsui Wah should pay attention is the food safety problem. In 2012, 10

accidents related to the food safety of Tsui Wah are reported while the number for Tai Hing is only

three. Though the food problems are all from the suppliers, it can still make great harm to the reputation

of Tsui Wah with the customers increasing awareness on food safety.

4.2 In mainland, Tsui Wah ‘s different positioning leads to different concerns.

In mainland market, Tsui Wah’s competitors include not only other HK Cha Chaan Tengs, but also a lot

of Chinese traditional casual restaurant and foreign Café, which also target the middle class as Tsui

Wah.

Tsui Wah entered the mainland market in 2009, which is 5 year behind his competitors Tai Hing. Also

all the six Cha Chaan Tengs are in Shanghai and in other first­tier cities Tai Hing can be found but it is a

blank for Tsui Wah.

Gladly, there is no significant market leader in mainland market and Tsui Wah still has the chance to

expand in mainland and gain more market share.

4.3 Tsui Wah also has its unique advantages over others. By elaborating more on them, Tsui Wah can

have much better performance against its competitors.

As the first Cha Chaan Teng to be listed in HK stock exchange, a lot of capitals are raised and the good

share price shows people’s confidence on Tsui Wah’s further growth. More important, it makes it

possible for Tsui Wah to open more Cha Chaan Tengs to stabilize the leading position in HK and gain

more market share in mainland.

Apart from that, the unique central kitchen system can also give Tsui Wah a lot of advantages over the

competitors. Leveraging the economy of scale, the raw material cost is about five percent lower than Tai

Hing and at the same time, the high quality and consistent taste of dishes can be guaranteed.

5. Market analysis

5.1Tsui Wah is in the traditional HK Cha Chaan Teng industry. Though it is one of the most important

parts of HK catering industry, it is gradually losing its honored position and attractiveness due to the low

profitability, unhealthy eating habit and rising alternatives.

5.1.1 Low profitability

The market seems to be appealing; however, the violent competition and rising material cost have driven

the profit down by a large degree. A low profit margin compared with other related industries is

observed (See Appendix). On the one hand, the raw material cost and rental expense are expected to

keep rising and the COGS will remain a high proportion. On the other hand, reduction in bonus or even

a layoff might discourage the current employees a lot. In a conclusion, it is hard for the companies in this

industry to increase the profit margin.

5.1.2 Unhealthy eating style

The new generation may not prefer Tsui Wah and other Cha Chaan Tengs because the unhealthy eating

style. The main dish for traditional Cha Chaan Teng is Chinese Barbecue. And this oily and unhealthy

food goes against the customers’ demand for healthy lifestyle. Besides, in order to have a faster turnover

rate, customers are often encouraged to eat as fast as possible and this could bother the customers as

well.

5.1.3 Rising alternatives

Nowadays, for Cha Chaan Teng industry, there are actually a lot of alternatives. For the premium

segment, a lot of western restaurants are available and the price is almost the same as Tsui Wah. As for

the cheap alternatives, there are a lot of Chinese food restaurants, competing against Tsui Wah with a

much appealing price.

5.2 Meanwhile, there are also a lot of rising opportunities, adding new lives to this industry.

5.2.1 Large market potential

With so many years developing after reform and open, China economy improves sharply as well as personal income. According to Frost & Sullivan, the average personal income is forecasted as 26,664.1 RMB in 2013 and this number is going to increase to 36,210.9 RMB in 2016 (See Appendix). Significantly, the outflow for food is estimated as 6520.7 RMB in 2013, which occupies almost a quarter of people’s total income and indicates a strong consume power of food among Chinese people. In the same time, Chinese restaurant industry grasped 21,000 billion in 2012 with a 13.3% average increasing rate. This number is measured to be 13.6% in 2016 with estimated total industry revenue of 40,000 billion. In this industry, the percentage of leisure restaurants was only 14.7% in 2012, however, the compounding increase of which reached the highest point, among other restaurant categories, of 27.2%, showing a strong growing possibility of leisure restaurant industry. 5.2.2 Demand for Health Food

Foods produced in China are nowadays facing severe safety scandals. From the food producers, suppliers, distributors all the way to restaurants and hotels, there are all some ugly scenes occurred during these years. Therefore, this is no doubt that people in China are looking forward to a safer circumstances to enjoy their meals. Tsui Wah’s central kitchen is introduced to be able to solve these problems with a reliable channel to guarantee its high quality food. 6. SWOT Analysis­Charles

SWOT is applied to summarize and supplement the results from above analysis. A profile of Tsui Wah’s current business is shown and Tsui Wah Teaway’s value is emphasized.

Strength Weakness

Internal & External There is enough capital for the aggressive expansion since almost 0.7 billion is raised through the IPO one year ago.

Tsui Wah’s unique central kitchen systemcan increase the efficiency and take advantage of the economies of scale.

The high quality andaffordable Hong Kong traditional food.

The varieties of dishes are limited and the introduction of new dishes is rather slow.

The company lacks experience in mainland operation and the current performance is not satisfying.

The brand awareness isrelatively low in mainland and the good reputation hasn’t been built yet.

Opportunity SO WO

The mainland casual restaurant market is of great potential in terms of scale and growth rate.

The media’s recent report of Starbuck’s high

Leveraging the capital to expand business in mainland.

Introducing HK traditional dim sums and high quality tea.

Providing the desirable environment for customers through

Investing more in making new dishes.

specialized in offering more flavor and varieties of tea and dim sums.

Making adjustment to both the management team and operation

pricing and Taiwan poison starch in milktea.

Customers’ preference towards peaceful and comfortable dining conditions.

decoration and services.

form

Threat ST WT

Tsui Wah is far behind its competitors in the mainland market due to late entrance and slow expansion speed..

Mainland high­end customers do not enjoy the noisy atmosphere of traditional Cha Chaan Teng.

Mainland customers inadaption to traditional Hong Kong food.

Grabbing a larger market share in mainland by quickly establishing more restaurants.

Taking advantage of the reputation of Tsui Wah in HK Cha Chaan Ten industry.

Operating in a new form and creating cozy and comfortable atmosphere for our customers.

Improving the efficiency and effectiveness in the mainland expansion.

Repositioning is needed to adjust to the mainland market.

The mainland market is promising and is essential for Tsui Wah’s sustainable development.

Though the operation now in mainland is not that satisfying and Tsui Wah is behind his competitors, the capital injection along with Teaway can bring great changes. specialized in offering tea and dim sums can be much more efficient and guarantees a high expanding speed and scale. The negative news about Starbucks and Taiwan milk tea can help Tsui Wah capture more potential customers and have a smooth entrance.

In a conclusion, with high efficiency and quality, Tsui Wah Teaway is the optimal choice for the company to lead this potential market in mainland. 7. Recommendations 7.1. Marketing Objectives and Product Profile

The performance of current Tsui Wah Cha Chaan Teng in Mainland is not as well as we expect, which shows people’s low acceptance to traditional Tsui Wah mode. So Tsui Wah needs to adjust according to customers’ different demand in order to be the leader in mainland market. To achieve this goal, Teaway could be introduced as a new entity to Tsui Wah’s operation in mainland. Teaway as a mixture of eastern teahouse and western Cafe is specially designed to satisfy the customer’s need for not only high quality food but also the superior relaxing and peaceful experience. It pays cautious attention to deliver a space away from sound pollution and distraction in order for our customers to enjoy our specially made famous tea, dim sum and Chinese pastry in a natural and relaxing environment. It offers a variety of famous Tea: dragon well, spring snail, Big Red Robe, Melon Seed and etcetera upon customers demand. It also provides traditional HK milk tea and dim sums, which stands for the HK Cha Chaan Teng culture. We aim to deliver the best at the most reasonable price. The design of the shop arises of simplicity and transparency. The exterior of the shop will be built with high technology anti­sound glass in cylindrical shape which more effectively blocks sound in order to promote the differentiation between the environment of the shop and the real world. The shop will further divided into 6 sections, where each section has two to four tables. Each section will be separated with thinner sound glass as well to promote a sense of ownership or group belonging. On the other hand, the interior of the shop will be built with light reflecting glass so light can stay inside the shop to save energy and prevent light pollution at night. We aim to be a sustainable business. As mentioned above, the revenue generated by Tsui Wah Cha Chaan Teng in China is not as much as it in Hong Kong. It can be seen that Tsui Wah in China has a large space to improve. The operation of Teaway is a good way to explore and gain more market share in Mainland. 7.2. Targeting and positioning The targeting customers can be summarized into three groups. The first group is the existing Tsui Wah customers. Teaway can be a good place for them to have dim sums and enjoy free time after having meals at Tsui Wah Cha Chaan Teng, allowing more profits capture from current customers. The second part is customers from Cafes. With more cozy and comfortable environment and traditional HK and Chinese food, Tsui Wah Teaway has the potential to grab a significant number of customers from other Cafes. The third type of customers is people who do not have the habits of Cafe or tea consumption. Triability becomes an important factor to attract these new customers. We believe our shop designs and focuses can win us favorability. The last group of possible customers will be tourist, which will be discussed in Landmark section. We believe launching should start from the niche marketing strategy. Most customers in the mainstream consuming market will not be willing to spend after official meals. Therefore, we will target the most ready customers who have the need to go somewhere else after dinner or lunch. Our goal is to provide a relaxing environment for them for work or date and enjoy their time while being at another segment of Tsui Wah. As the idea of after meal becomes more popular, we expect even non Tsui Wah customers and other Cafe customers to come into Teaway because we provide the most comforting working space for them. Whether they come for food and beverages or our shop design, we will capture greater spending from current Tsui Wah customers and work our steps up the Cafe industry to secure a

dominant position. 7.3 3P Analysis­Vincent 7.3.1Product

Brand: “The utopia of the metropolis” ，“寧靜的繁華” Tsui Wah established its long tradition making the Hong Kong people’s food. Reusing the

names with Teaway can share some of the cultural reputation, making greater profit through the brand equity. In response to the possible cannibalization effect, we believe this is not a big deal because Teaway does not actually serve full meal. The concepts of Cha Chaan Teng and Cafe shop differ fundamentally. Cha Chaan Teng can not provide the perfect environment for work, and think, which inspires us to create one for customers who demand romance, classy, peace and a break from the reality. On the positive side, Teaway may generate greater revenues from current customers, providing a place for dessert drinks, dating and relaxation after official meals. Customers who seek lunch or dinner will still go to the Tsui Wah Cha Chaan Teng.

Ultimately, Teaway takes the effort with high technology to create an utopia away from noise and air pollution. Our product focuses to bring subtle sensations to the minds of customers: calmness, relaxation, sharpness, and reminiscence. Our environment is the place for self­realization, creative thinking and design. The art of tea bears a special meaning to Chinese since the emperor age. The Chinese pastries and old tea on the Teaway menu links a harmony between the shop and our customers, taking us to rediscover peace of the city. The transformation of tea art into modern society comes to Teaway. We create a place to see the city in another way. The wisdom never belonged to us, we only made it possible. 7.3.2 Price Market­Skimming Pricing

High quality dim sum, tea products and elegant environment are our major promotional calls. Since we are the inventor of these tea shops in Shanghai, we should establish a strong images of our standards to local customers. By pricing our service and products high initially will trigger psychological product superiority among other possible substitutes. Customers who refer to their previous experience may be made to believe price tells about the quality. The tea products are sold to customers who have the money and adventurous mind to seek new experience. In the mean time, we will offer set menus so customers can make more purchases even if they differ in product pricing opinions.

Depending on the need to lower the price to attract more customers, we will lower the price of our old products, and introduce new tea with discount deals. In this way, Tsui Wah Tea skims the maximum amount of revenue from the various segments of the market. At this stage, we also try to develop a group of loyal customers. We can provide Tea shop registration form at the back of their receipts for them to register as members for free. 7.3.3 Place Landmarks strategy

For popular tourist city like Shanghai, it is highly probably that we can establish a new landmark of the city, by have innovative design of the shop. Teaway shop allows its customers to have comfortable spot to spectate the city of Shanghai. The cylindrical structure with high technology sound proof glasses of the shop offers a near 360 degree revolving tour, separating tourists from the noise of busy crowds and hot air from car engines. While enjoying a filtered city of Shanghai, both western and eastern tourists can enjoy the most cultural pastries and tea of the Chinese. We believe such combination goes beyond a place for locals to work or relax. It can be a very successful tourist attraction at the locations of busy streets, city government, museum and universities. 7.3.4 Market Channels

The nature of the Tsui Wah Tea shop borns from the appreciation of tea with the proper environments at the most affordable price in Shanghai. Since the freshness of the Tea is important as well as the cost, the Tsui Wua should have its own storage to preserve the tea so that it can send the urgent raw tea materials to the Tea shop accordingly. Expensive tea should be handled with machines so the proper treatment can be done. Since usually good raw tea is limited, a contractual vertical marketing system should be implemented to guarantee the amount of tea leafs and tea costs when the Tea Shop first enters the Shanghai Tea market.

While Tsui Wua is based in HK, the Teaway shop should position itself at the well known district of Shanghai. The shop does not have to be big, because the quality of the environment is more important at the introduction stage. At the reputable district, it is more likely to attract wealthy people to the shop. With the social elites start using the shop as a place to chat which lead the trend, this may motivate the middle class to join in. 8. Customer Adoption Analysis

In order to launch a successful product, it is necessary to analysis how our product’s innovation diffuse across the consumer group. The goal is to develop a sense of risk as well as expectation comparing Teaway to other shops under compatibility, relative advantages, triability, observability, and complexity.

According to our consumer research, Shanghai people have emerging demands for suitable environment to think and sit quietly. Restaurants, canteens, home and even most cafes rarely meet those means due to the lack of technology implementation, and human control. We plan to invest in advance sound proof technology for consumers in our interior and exterior design to minimize noise inside and outside of the shop to provide the cozy and quiet environment effective for studying and thinking. Besides quality setting enjoyment, we also make consistent high quality tea and tea pastries to meet the taste expectation of our customers.

The economic risk of trying out Teaway is low because people can walk in and feel it before they decide to order and sit down. Having extra consumers walking into the shop are beneficial because they do not increase our costs. Regardless of the purchases, our customers can enjoy the full length of the time period consuming our tea and pastries. We considered the problem of table hawking, which

one person is not willing to give up his seat. Unless it is necessary, customers may be asked to leave due to the end of his term of consumption. Fortunately, Shanghai is rated one of most polite city in the world, and we won’t have to do it often.

There is virtually no difficulty in valuing and noting the service Teaway provide because everything can be felt instantaneously. Consumers would immediately sense the difference inside and outside the shop due to the sound proof system our shop has. In the process of innovation, we discovered two types of key consumers; food consumers and environment consumers. One may not feel the the need for the other’s as essential. However, the demands for these two consumers are not contradictory. We can provide excellent setting and outstanding products, because both are technology based. Our machines for tea will be customized to eliminate copying. Our fixed costs may increase, but it is something to be loved. 9. Promotion 9.1. Identify the target audience The target audiences are modern citizens from both upper­middle class and upper class who are seeking for the elegant and comfortable relaxing environment to enjoy their meals and escape from the stress of the noisy and polluted city life, like golden collars, white collars, public servants, businessmen,lawyers and so on. These target customers mainly have two demands. On the one hand, they are bored with the modern noisy city life, and want to enjoy some leisurely and comfortable moments in the busy life. They are a group of fashion people, who are searching for the quality life and bored with the stressful and noisy city life. So they prefer a cozy environment to relax, not the noisy and crowded ones as traditional cha chaan ten. The peaceful experience provided by Teaway can directly satisfy their needs. On the other hand, they like Chinese traditional food and drinks especially the Chinese Tea and dim sum. When they need to chat with friends or have a short relax, they would like to find a place which can provide them some Chinese traditional snack food and drinks. As our search, we find that there are few place in Mainland where both demands can be satisfied. However, this part of customers take a large percentage in the modern city, especially for the big city like Shanghai. Tsui Wah Teaway combining the exquisite Chinese tea drinks and traditional foods in a cozy environment can appeal to a large number of customers. 9.2. Buyer­readiness stages and Communication objectives: Teaway is a totally creative and attractive form of leisure dining room, so our buyer­readiness stages at the beginning is to build awareness and knowledge. And our objective in this two stages is arousing awareness and creating the desire of our target customers. After half year’s introduction period, the focus will shift to liking and preference stages, and make it be thought of and compared when they choose place to relax and let the target customers have the willing to try our product. And then, the confidence will be moved to the conviction and purchase stages successfully, and try to attract them at the first experience and make them love this style of relax.

For the second year, we will move to the repurchase, and the most important thing in this stage is to build loyalty and relationship with the customers,which can make it be a popular trend among the up­middle and up class people. 9.3. Design the message 9.3.1 The big idea: full with tranquility

On the one hand, “full” means you full your stomach after eating our high quality tea and Dim Sum. On the other hand, “full” means you feel satisfied with a totally new and tranquil self after enjoy such an magic experience in Teaway. A: customers’ expectation or aspirations­­­­The desire to escape the noisy and polluted city and have a quite and cozy environment to relax & the love for high quality Chinese traditional tea drinks and foods & the fashion and health lifestyle. B: Category Consumption Drivers­­­­Health as a driver for catering industry;Food safety is highly being concerned by the middle and upper class of Chinese people; Dining in a cozy environment. C: Brand DNA­­­­the unique experience ensured by technology and human control; The safety and high quality food provided by center kitchen; The prestigious old brand from Hong Kong. (show by picture) 9.3.2 Creative Strategy: combine the Rational Appeal and the Emotional Appeal

Firstly we will use the emotional appeal to show the modern people in the large city is very stressful and have no where to escape from the noisy and polluted city. By these kind of negative emotions to find the same feeling with our target customers, and entice their wants of finding the solution. And then, we will use the rational appeal and introduce Teaway’s benefits and attributes. By the striking contrast, show Teaway is exactly the solution they are finding. At the end, we will ask the question that: are you still hesitate to have this full with tranquility? 9.3.3 Message Format: our message format will mainly use contrast to catch target customers attention. The actual state of them are living in the noisy and polluted city with a very profitable but more stressful job. The dream state of them is have a high quality life and enjoy their exquisite drinks and foods in a cozy place. After this kind of contrast , they will think our Teaway is the bridge taking them from reality state to dream state, and have the willing to try. 9.3.4 Communication channel we will combine both person and non­person communication to promote, however, we will mainly use the channel of non­personal. For the personal channel, we will try to attract the opinion leaders by setting a Market­Skimming Price for the ones who have the largest willing to try. After their try, they will introduce Teaway to their friends or clients. Because of the huge rallying point of these opinion leaders, our products can became a popular trend among the upper class groups.

For the non­personal channel, firstly, our public relation department will arrange the opening ceremony, public exhibits and other events to show our canteen for the target customers. Secondly, we will use the technology to design our unique environment to build the cozy atmospheres.

Thirdly, which is also the most important part, we will use the major media, including Gourmet Magazines (some positive comment from famous food writers), broadcast media (set advertising on TV), display media(large posters on the wall of large shopping malls) and online media(Teaway website & some online social and sharing networks, like Webo, which is very famous in China) to let more people know us and cause more personal communication. By all these three channels, we can firstly flow our message the the opinion leaders, and then from these opinion leaders to others, just like what we have mentioned before. 5. Integrated marketing communication strategy

Based on the characteristics of Teaway, we mainly choose the mass communication method, which has three specific ways: advertising, sales promotion, and public relations. At the beginning, after the launch of first Tsui Wah Teaway, mass promotion campaign will be conducted to introduce it and increase the customer awareness.

In half a year’s time, Commercials focusing on the great experience offered by Teaway will be shown on some carefully chosen TV programs. Programs about high quality food and stress releasing can be great carriers of our message. In addition, more and more citizens now take subways to work in Shanghai. Featured poster can be posted in the subway station. The great contrast between the noisy and busy station and quiet and peaceful Teaway can express the great food and atmosphere of Teaway intensively and vividly. The approach of new media will also be leveraged to attract the young generation. The combination of web page, facebook group, microblog and phone app can be one of the most cost­efficient way to raise sales.

For the second half of the first year, sales promotion will be widely applied. Discount, coupon, premium and a variety of creative ways will be used. The aim is to get a larger market share by attracting more new customers and deliver good customer experience.

For the second year, the main purpose is to increase the customer loyalty and promote the special experience of dining at Teaway. On the one hand, a good reputation could be build through the great public relations. To reach this goal, the senior management should be willing to accept the interview of magazines and newspaper to tell the story of themselves and Teaway. The employees should work hard and smart to serve every customers. Teaway should also try to win the title for food,service and environment as well to further build the reputation.On the other hand, a 2nd round sales promotion will also be used. For this time, the privilege will be given to the loyal customers. VIP and purchase points system will be made to cultivate the customer loyalty. So within two years, Teaway is expected to continuously attract new customers and maintain a significant number of loyal customers. 6. Budget plan and contingency analysis

With the 700 million capital raised in the IPO, Tsui Wah will not face cash inadequacy when carrying out the plan where less than 50 million initial investment is needed and good cash management can be maintained. So the crucial point is to examine the profitability of Teaway. The financial forecast of the operation has suggested that Tsui Wah Teaway could generate around 50 million profits in two years time.

Another significant advantage of Teaway is the flexibility. Tsui Wah Teaway and Tsui Wah Cha

Chaan Teng are highly convertible and the cost incurred in redecoration and changes in menu and dishes could be small. With a great chance, Teaway is going to be a great success and Tsui Wah can transform more Cha Chaan Teng to Teaway to capture more profits. In case there is a failure, Tsui Wah can still operate in the traditional way of Cha Chaan Teng to wait for another chance. Conclusion

With the ambition, capital, capacity and reputation, Tsui Wah has almost everything to capture great fortune in the potential mainland market. Our product tailors to need of city people while it also deepens chinese culture in the society, promoting recognition of asian art even to tourists. Tsui Wah Teaway is not only a shop that caters quality environment and goods, but also responsible to the society in the prevention of light and noise pollution. We believe our success will be a result of enthusiasms and good efforts.

Industry

Average

COGS

Rental Expen

se

Wage Expen

se

Other Expen

se

Profit Marg

in

Cha Chaan Teng

31% 18% 26% 11% 14%

Cafe 17% 26% 14% 20% 23%

Fast food

23% 15% 17% 145 31%