oasis living final v10b complete

8/8/2019 Oasis Living Final v10b Complete

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MKTG 1064 Global Marketing Group Assignment

Executive Summary

Due to the rapid globalisation and a ever changing dynamic economy, there are plenty of

opportunities for organisations to seek for. In order to remain competitive within its

industry, Oasis Living has to constantly adapt to the changes and capitalise on existing

opportunities in order to survive (Shapiro 2008).

The objective of this report is for Oasis Living to establish opportunities for new market to

pursue. Potential markets were chosen using PEST (Political, Economic, Social, and

Technological) analysis to assist us in determining which country and city is the most

favourable for Oasis Living expansion plan.

Using the Porters five forces model, it reflects that the industry is fairly attractive positive

and there are no known factors threatening the company's profitability and sustainability.

Lastly we analyzed Oasis Living mode of entry strategy and each of its marketing mix in

order to formulate recommendation and determine how these factors and strategies will

affect and contribute to the expansion plans of Oasis Living into Shanghai .

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1.0 Introduction

Oasis Living was founded by Yong Lee Cloth Merchant Pte Ltd and Europa Interiors (S)

Pte Ltd 2006. It is a premium lifestyle brand which delivers beautiful decorative bed linens,

cushions and towels with uniquely designed fabrics to match the exquisite taste of

customers. At Oasis Living, all products are crafted using a choice selection of deluxe

fabrics complemented with the most excellent finishing and attention to details.

Oasis Living seeks to provide customers with solutions to decorate and enrich functionally

and aesthetically their living areas. The products which they produce for retail sale are

ensured with unique designs, style, quality and comfort. In order to achieve such high

standards of quality, Oasis Living employs a skilful team of people dedicated to produce

quality products with the finest finishing and final touch.

In 2007, Oasis Living launched the Oasis Living Gallery at No. 3 Ubi Crescent which

displays both retail and custom made collections all under one roof to provide greater

convenience to their customers and made their first overseas expansion to Malaysia.

2.0 Macro-Environmental Research

China, Spain and Russia were selected to be the three targeted countries that Oasis Living

could further expand into as there is greater market growth potential and opportunities

among these three nations textile and garment industry. According to World Bank (2010b),

they are rank well ahead of Singapore in terms of Gross National Income (GNI) and Gross

Domestic Product (GDP). In addition to that, China and Russia are categorised as emerging

country while Spain is a developed European Union member.

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2.1 China

Chinas retail market has rapidly continued to develop over the past few years. New

networks of chain store, shopping malls are now emerging not only in the three busiest

cities such as Beijing, Guangzhou or Shanghai but also other rural cities. This has not

only bring in an annual average growth rate of 17.25% representing RMB6.81 trillion but

also the importance of a more robust domestic consumer retailing market which is expected

to reach a total value of RMB10.8 trillion by growing about 45% between 2010 and 2014

(Access Asia 2010). Despite the fact the global recession has affected the Chinese

economy's short-term prospects, it is predicted that the textile and garment industry will

benefit from the significant economic growth of china over the next two years (Business

Wire 2009).

2.2 Russia

Russia has been regarded as one of the emerging economy after China in recent years

(Economist2008, Stefanovic 2009). Domestic demand for textile and garment industry had

grown despite the fact that the rouble had strengthened compared to a year ago, indicating

that people are now spending more moderately and focusing more attention to the

difference in price and quality between local products and imported goods (Interfax 2010)

2.3 Spain

Since the last decade, there is strong performance both in terms of output growth and

employment from the Spanish economy where the GDP grew at a stable rate after joining

the European Community in 1986 (Sosvilla-Rivero & Herce 2008, Farr & Vella 2008).

Although the economic crisis in 2009 had hit almost every country on the planet, GDP

growth for Spain is expected to begin to recover modestly in the second half of 2010 from

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-1.1% to 1.7% in 2013 where consumer confidence and private consumption should

gradually improve by then (Economist Intelligence Unit 2009).

2.4 Analysis of Selected Countries

The selected countries namely: China, Russia and Spain will be analysed based on their

individual political, economical, social-cultural and technological factors. For each factor, 3

points will be allocated to the most attractive country, followed by 2 points for the lesser

attractive country and 1 point for the least attractive county. Subsequently, the country with

the most total points will be chosen for the expansion plan. Table 1 below illustrates an

analysis of the three counties chosen.

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Table 1: Analysis on China, Russia and Spain

Political Factors China

Points

Given

Russia

Points

Given

Spain

Points

Given

Corruption

Perception Index (out

of 180 countries). This

is to ensure that it is

easier to set up

operations without

facing issues of

bribery and abuse of

resources

(Transparency

International 2008)

Ranked 72nd

20102

Ranked 147th in

20101

Ranked 28th in

20103

Global

Competitiveness

Index (out of 134

countries). This is to

measure the ability of

countries to provide

high levels of

prosperity to their

citizens (World

Economic Forum

2009).

Ranked 29th

in the

Global

Competitive

ness report

of

2008/2009

3

Ranked 63rd in

the Global

Competitiveness

report of

2008/2009

1

Ranked 33rd in

the Global

Competitiveness

report of

2008/2009

2

Country Risk

Rating / Business

Climate Rating

(Coface 2010).

A3 / B 2 C/B 1 A3/A1 3

Taylor Wessing

Global Intellectual

Property Index (out

of 24 countries)

(Taylor Wessing

2009).

24th 1 21st 2 13th 3

Index on Ease of

Doing Business (The

89th 2 120th 1 62nd 3

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World Bank Group

2010a)

Strength of Investor

Protection Index

(The World Bank

Group 2010)

5 - 5 - 5 -

Economic Factors ChinaPoints

GivenRussia

Points

GivenSpain

Points

Given

Gross Domestic

Product (GDP)

Growth in 2009

(Central IntelligenceAgency 2009)

Estimated

8.9%

growth

3Estimated -7.9%

growth

1Estimated -3.6%

growth

2

Stability of Exchange

rate (relevant to

Singapore dollar as on

1st March 2010 (XE

2010)

1.00 SGD =

4.854 RMB2

1.00 SGD =

21.345R

UB

31.00 SGD =

0.51EUR1

Total FDI Inflowin

2005

US$153.54

Billion

(US-China

Business

Council

2008)

3

US$13 Billion

(European

Commission

2010)

2US$6335

Million

(Gobierno de

Espaa 2010)

1

Gross National

Disposable Income in

2007

US$328

Billion

(DGBAS

2010)

3

US$2.03

Million

(OECD 2009)2

US$1.38

Million

(OECD 2009)1

Social-cultural

FactorsChina

Points

GivenRussia

Points

GivenSpain

Points

Given

Population of

Residents Aged 15-

64 as per 2010

72.1%

3 71.5% 2 67.34% 1

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(Central Intelligence

Agency 2009)

Literacy Rate

(age 15 and over that

can read and write)


Agency 2009)

90.9% 1 99.4% 3 97.9% 2

Technological

FactorsChina

Points

GivenRussia

Points

GivenSpain

Points

Given

Number of Internet

Hosts

(Central IntelligenceAgency 2009)

14.156

million

3 7.663 million 2 3.537 million 1

Number of Internet

Users


Agency 2009)

298 million 3 45.25 million 2 25.24 million 1

Total Score China 28 Russia 23 Spain 24Table 1: Analysis of 3 Countries Selected

Based on the table above, China has proven to be the country embedded with better

opportunities for Oasis Livings expansion as most of the PEST factors that the company

has emphasized are proven to be better rated in China. In addition to that, China and

Singapore's culture and spoken language are somewhat similar to each other.

3.0 City Selection

As China consists of numerous cities and provinces, we have decided to select a major city

in order to penetrate into the Chinese market as Oasis Living initial expansion plan.

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3.1 Shanghai

Shanghai is the largest city in China, with an estimated population of 20 million. Described

as the worlds fastest growing economy, Shanghai is known as the largest centre of

commerce and finance in China (Harbach et al 2010). The city has hosted various world

events, with the upcoming Shanghai Expo 2010 which will tremendously attract necessary

businesses. The city also hosts a concentration of manufacturing activity in key industries

such as automotive, electronics, telecommunications, machinery, textiles, iron and steel,

and petrochemicals. With its advantageous geographical location in the eastern side ofChina, it has the most heavily trafficked trade ports, allowing easy access to the global

world (Nie & Xin 2009).

3.2 Beijing

Beijing is the capital city of the China, and the country's political and cultural centre.

Beijing boasts an excellent transportation hub, with railways and roads linking to other

cities in China. It is also the focal point for all international flights to China. Beijing is a

combination of both traditional and modern prosperity, as being one of the worlds largest

ancient cities and the housing numerous institutions and research centre, and countless

shopping malls, providing a modern international outlook (Harbach et al 2010).

3.3 Guangzhou

Guangzhou, capital of Guangdong, is the largest and most flourishing industrial and foreign

trade centre in Southern China. Being an excellent port on the Pearl River navigable to the

South China Sea, Guangzhou has fast accessibility to Hong Kong and Macau. Being one of

the first cities to benefit from Chinas Reform and Opening Up policy since 1978,

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Guangzhou acts as the pioneer of economic development of the country, with thousands of

large, small and medium-sized enterprises, which offer more job opportunities and making

the city a heavily populated area (Travel China Guide 2010). The city is also the political,

economic, cultural, and technological and transportation centre of Southern China and the

open coastal city is famous for being an example of a comprehensive reform experiment

area within China.

Table 2: Analysis on Beijing, Shanghai and Guangzhou

Criteria BeijingPoints

GivenShanghai

Points

GivenGuangzhou

Points

Given

Total Retail Sales

by Province

(RMB) [2009]

(Access Asia 2010)

$327.35

Billion2

$355.07

Billion3 $314 Billion 1

Population [2010]

(China Knowledge

2010)

17.55

Million

2 19.2

Million

3 3 Million 1

Average Annual

Disposable Income

of Urban

Household (RMB)

[2009] (China

Knowledge 2010)

$7,064.21 2 $8,112.55 3 $6,284.17 1

Total GDP (RMB)

[2009] (Access

Asia 2010)

1,148.44

Billion

2 1,477.87

Billion

3 $900 Billion 1

GDP per Capita

(RMB) [2009]

(CNA 2010)

$68,788 1 $71,873 2 $81,232 3

Cost Of Starting a

Business [% Of

Provincial GDPPer Capita]

3.2

(Doing

Business2008a)

2 4.8

(Doing

Business2008b)

3 6.3

(Doing

Business2008c)

1

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Ease of Creating

and Registering

Collateral

[Ranking] (DoingBusiness 2008)

12th in

China

1 1st in

China

3 2nd in China 2

Ease of Enforcing

Contract

[Ranking] (Doing

Business 2008)

9th in

China

1 4th in

China

2 1st in China 3

Time Required to

Register and Start

a Business [Days]

(Doing Business

2008)

37 Days 2 35 Days 1 28 Days 3

Consumer Price

Index (CPI) [Nov

2009]

(NBS China 2009)

98.4 2 99.5 3 97.4 1

Beijing Shanghai Guangzhou

Total Points 17 26 17Table 2: Analysis of 3 Cities Selected

From Table 2 above, it is obvious that Shanghai obtained the most points with regards to

the factors mentioned. With more people wanting to living in the city, demand for the real

estate industry is booming, and the population in Shanghai will increase. As such, there will

be a big market for Oasis Living to expand its business into Shanghai.

4.0 Shanghais Bed Linen Retailing Industry Attractiveness

The analysis of Porters five forces (Figure 1) will reflect how attractive Shanghais bed

linen retailing industry is for Oasis Living expansion plans.

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Figure 1: Porters 5 Key Forces (Adapted from Friend.G & Zehle.S, 2009, Guide to Business Planning,Profile Books.)

4.1 Threat of new entrants (Moderate)

Threat of new entrants is relatively high as free trade is encouraged between Shanghai and

various countries. Aside from foreign investors, Oasis may also face new competitors in

terms of their Chinese suppliers who integrate forward by setting up a retail business to

compete with them and sub vendors having home-based business in the same industry.

4.2 Bargaining power of suppliers (Relatively Low)

A search online has enable us to discover a vast number of suppliers in Shanghai, whereby

they are able to provide Oasis Living with the fabrics required and the manufacturing

process (Textile Center 2010). Oasis Living will be able to obtain their supplies of products

from different various suppliers or sources, and there is low switching costs should there be

an unsuitable supplier. Thus, the power of suppliers is relatively low as there are many

suppliers that are readily available to supply raw materials.

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4.3 Bargaining power of buyers (Moderately High)

As the quality of linen depends on thread counts and material used, bed linen is not usually

considered a luxurious product. It can be considered as a seasonal product as people rarely

change their bed sheets except for seasonal changes, in this case, winter season in China.

To add, bed linen retailers do not have offer any loyalty program that reward their

customers for frequent usage of products. Hence, there is virtually zero switching cost. Due

to low switching costs and relatively little differentiation in bed linen, buyers have

relatively high bargaining power.

4.4 Threat of Substitute products (Non-existent)

As there is not much substitute products available for bed linen; therefore threat of

substitute products is relatively low.

4.5 Intensity of rivalry among competitors (Moderately High)

As bed linen business is a perfect competition business, intensity of rivalry among

competitors is moderately high as a search on Alibaba.com shows up hundreds of different

bed linen retailers in Shanghai. Retailers in this industry will have to compete against the

quality, services and product design in order to differentiate itself.

5.0 Target Market

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Oasis Living's target market can be evaluated in which the company focuses on marketing

its products and services to middle income individuals within the age group of 18 to 34

years old in Shanghai. They are chosen due to the factors listed below.

5.1 Demographics

According to Shanghai Statistics Bureau, Shanghai has a population of 18.88 million in

2008. (Shanghai Statistics Yearbook 2009). Based on Figure 2 below, we estimate that

Oasis Living's target market makes up of 44% of the overall population in Shanghai.

Therefore, the target market is attractive as this constitutes for more than half of the

population.

Figure 2: Adapted from: Statistical Year Book, 2009

5.2 Psychographics

A research has showed that foreign brands tend to do well with younger consumers and

individuals living in more affluent cities, especially in Shanghai, Beijing and Guangzhou.

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With rising income level among the targeted consumers has given them the purchasing

power and opportunity to try new products, especially foreign brands. Stronger foreign

exposure is also the contributing factor for them to be more familiar and willing to choose

foreign products (Access Asia 2010).

In addition, consumption needs in China is diversifying further, as consumers tried their

best to fully reflect their unique style and establish their individuality and unconventionality

through their outward appearance and home decoration (Hong Kong Trade Development

Council 2010).

5.3 Buyer Behaviour

Due to rapid urbanization, more people are moving from other parts of China to live in

Shanghai, which result in rising family unit and housing area (Messe Frankfurt 2010).

Consumers are investing more of their money in buying houses and other long-term

investments (cars and insurance policies), rather than retail products (Access Asia 2010).

They are also spending more on services and non-retail consumption. To add, they are

buying into leisure and lifestyle, making them more image conscious and as a result, more

brand conscious. Price is no longer the first factor to consider upon their purchase.

Instead, they are demanding of high quality at a good price.

According to a survey conducted by the China Home Textile Association, 82 percent of the

Chinese are willing to purchase new home textiles items for house decoration (Messe

Frankfurt 2010). With an increase in the purchase of houses, there is indeed a bigger market

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for Oasis Living, as bed linen is one of the essential products which most consumers will

first purchased for their houses.

5.4 Market Positioning of Oasis Living

Figure 3: Adapted from: Dowling 2004

As mentioned in Figure 3, there are many bed linen retailers in the country. The targeted

market of Oasis Living is not afraid to spend more money so long as the product is of good

quality and have the ability to keep them comfortable and warm.

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Price

Low

Low HighQuality

X Shanghai Hometex

X Friven

X Oasis Living

X Aussino


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As such, Oasis Living should continue to position itself as a premium lifestyle brand,

selling high quality product at a reasonable price. Needs of consumers are focused as

product design and quality can be accustomed according their requirements, at a reasonable

price.

Since Oasis Living is set up by 2 separate companies with different expertise, they indeed

have an advantage, in terms of track and experience, over other similar retailers in the

industry.

6.0 Market Entry Strategies

Considering the attractiveness of the bed linen retailing industry in Shanghai and the culture

characteristics of Chinese, it is essential to decide which market entry strategy is the most

appropriate for Oasis Living to adopt in order to enter Shanghai, and thereafter other

regions in China.

6.1 Modes of Entry Shortlisted

As such, Joint Venture, Contract Manufacturing and Wholly-own Subsidiaries (Greenfield)

are considered.

Table 3 below shows a list of advantages and disadvantages of each entry mode.

Table 3: Advantages and Disadvantages of Different Type of Entries

Mode of Entry Advantages Disadvantages

Joint Venture It enables Oasis Living to obtain capital,

technology as well as local society and

Oasis Living needs to pump

in more capital, which will

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government support easier, thus its own

capital expenditure and manpower is

greatly reduced.

It provides a greater flexibility, in terms

of management and its financing, to

arrange better business relationship in a

way that benefits both parties.

Oasis Living need not set up a new

corporation in China, as both Oasis

Living and its Chinese partner do business

using the Chinese business license under a

cooperative and contractual agreement.This will allow both parties to focus on

their business specialty.

It allows Oasis Living to enjoy high

degree of marketing control which would

shorten time taken to obtain local market

information.

result in higher risks.

Both parties involved do

not have the autonomy of a

sole proprietorship in the

decision making process.

Due to cultural differences

and profit sharing issues,

valuable time will be

wasted to settle anargument. Therefore,

importance of using correct

communication techniques

is emphasized.

Contract

Manufacturing

Oasis Living can sub-contract themanufacturing of their products to the

local Chinese manufacturers in

accordance to their requirements.

Oasis will still be having the rights for the

sales of their own products, which enable

them to control the market.

Oasis Living can reduce capital

investments and investment risks, while

maintaining its core competencies.

Oasis Living may facedifficulties in finding a

suitable manufacturer as

there are too many textile

companies in the industry.

Oasis Living may have to

share profits with them

The manufacturer may

become a key competitor

when the contract ends.

Wholly-own

subsidiaries

(Greenfield

Operations)

Oasis Living will have the autonomy and

independence to carry out global

strategies of its parent company without

having to consult their Chinese partners

Oasis Living will has full control over

management and production quality and

profit distribution so long as the legal

limitations are fulfilled.

The absence of local

participation may deprive

Oasis Living of important

social and political

connections.

More time and effort will

be spent to hire trained

professionals and to create a

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sale network.

There will be a higher risk

due to higher investment

involved.

Source: Starmass Online 2010

All three modes of entry stated above are feasible to be utilised by Oasis Living to enter the

Shanghai market in China and they will be further analysed as shown in Table 4 below. The

analysis will reflect both the advantages and disadvantages of the three methods separately

in order to determine the best entry mode for Oasis Living in order for them to make their

first step into Chinas market.

6.2 Assessment of Entry Mode based on Specific Criteria

3 = Most Favourable, 2 = Favourable, 1 = Least FavourableTable 4: Assessment of Entry Mode based on Specific Criteria

Decision

Criteria

Weight

Joint Venture (JV)

Contract

Manufacturing

Wholly Owned

Subsidiary (WOS)

Rank

Score

(Rank X

Weight)

Rank

Score

(Rank X

Weight)

Rank

Score

(Rank X

Weight)

Control of

Business3.0 1 3.0 3 9.0 2 6.0

Profits

Earned2.0 1 2.0 3 6.0 2 4.0

Risks

Involved2.0 3 6.0 1 2.0 2 4.0

Costs

Involved 1.0 2 2.0 1 1.0 3 3.0

Flexibility in

Adapting to

Changes

0.5 3 1.5 1 0.5 2 1.0

Commitment

to business0.5 2 1.0 1 0.5 3 1.5

Total 10.0 12 15.5 10 19.0 14 19.5

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In order to determine a more favourable entry method that would be in line with Oasis

Livings strategic direction, based on Table 4 above, weight scores were allocated to reach

criterion based on its level of significance towards Oasis Living in setting up a business in

Shanghai. Hence, it is apparent that wholly owned subsidiary (WOS) is more appropriate

for Oasis Living during its initial stage of investment in China.

6.3 Short-term Market Entry Strategy: Wholly-Own Subsidiaries (Greenfield)

Oasis Living is solely responsible for providing all resources (capital, technology) required

in order to enter the Shanghai market via this strategy. Most importantly, Oasis Living will

have the full control of management and profits need not be shared with any Chinese

partners.

A retail space counter will be rented in Qi Bao Shopping Mall, one of CapitaLand mall in

Shanghai, as an initial market analysis for Oasis Living. As mentioned above, with low

bargaining power of suppliers, Oasis Living will have little difficulty in finding a suitable

local manufacturer to provide supplies. To ensure successful penetration into the market,

Oasis Living can tap on the incentive programs on capability and market development

provided by the Singapore government whom are assisting local Small Medium Enterprises

(SMEs) for overseas expansion (IE Singapore 2010).

With government incentive program and the lower labour costs in Shanghai, capital

expenditure required by Oasis Living will be greatly reduced, and therefore, investment risk

will be indirectly reduced. In addition, with rapidly evolving regulations in Shanghai to

cater the increasing demands of the Chinese economy, Oasis Living will not have

objections from the Chinese government (Anonymous 2002).

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6.4 Long-term Market Entry Mode: Joint Venture

After exposure to the Chinese market via Wholly Own Subsidiaries (Greenfield) and

gaining substantial amount of market share within 3 years, Oasis Living will be equipped

with in-depth knowledge regarding aspects in relation to running an outlet in Shanghai. To

add on, the list of suitable manufacturers and loyal customers gained within 3 years will

provide critical information for further possible expansion opportunities.

In turn, this will become a competitive advantage in search of a Chinese partner for the

joint venture, whereby it is a more convenient way of obtaining resources and building

relationships with the Chinese partners (Anonymous 2002). In an industry where rivalry

among competitors is high, having a Chinese partner will help Oasis Living to ease the

impact of environmental uncertainties by providing local knowledge and network

resources. This, in turn, will enable Oasis Living to gain more awareness with regards to

different consumer behaviour and gain higher brand recognition in the market (Chan

2003). Earnings, risks and losses will be shared among both investors as specified in the

contract.

However, Oasis Living will need to take note of limitations of such approach. In the long

run, should the contract ends with the Chinese partner, the company may become a key

competitor in the same industry. Thus it is essential for Oasis Living to maintain good

relationship with the Chinese and its stakeholders.

Therefore in the long run, entering other areas of China through Joint Venture will be a

more feasible strategic idea in comparison to other entries.

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7.0 Marketing Mix Recommendations

7.1 Product

Bed linen from Oasis Living is positioned as a specialty good, one that is of higher price,

and notable quality. As things are much cheaper in China, it would more cost effective for

Oasis Living to find local suppliers than to import materials from Singapore or overseas

(Runckel & Associates 2010).

Duration Objectives StrategiesShort Term

Phase 1-2

To introduce, create

awareness and

market Oasis

Livings brand and

bed linen services to

Shanghai. .

Provide standardised,

consistent, superior

and quality products.

Long Term

Phase 1-3

To become the

favourable brand and

ideal choice of

luxury bed linen in

Shanghai and beyond

by offering more

variety and choice.

To develop a top

management and

marketing team that

keep in trend with the

ever-changing

customers' needs and

desire by providing

excellent services

Table 5: Product strategy and objectives

7.1.1 Three Levels of the product

The core product offer through Oasis Living bed linen is comfort and sense of luxury

feeling that is exclusive and not easily available from other retailing brands. The actual

product is bed linen made from quality textiles, made from the finest 500 thread count

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100% cotton sateen and exclusive designs where quantity of each design is limited (Oasis

Living 2010).

The custom made collection features bed linen, bed cover and cushion customized to match

customers exquisite tastes. Customers can choose from a selection of fine fabrics and

Oasis Living promises outstanding workmanship to meet their customers distinct

requests. The augmented product Oasis Living offers is post-purchase service, where staff

can advise customers on how to best care for their bed linen either during purchase or after

purchase through phone call enquiry. Staff can also make suitable recommendations to

individual customers based on their needs or preferences. (Oasis Living 2010).

7.1.2 Product Range

Oasis Living offers two main bed linen categories, luxury and casual. Several ranges will

be offered at a later period to appeal to customers of different dispositions. Luxury

items offered by Oasis Living consist of intricate designs and a combination of quality

textures like silk and linen. Casual refers to linen with simple chic design and comfortable

for everyday use nonetheless accompanied by affordable price. Another approach is to

develop certain themes for different times of the year, or for different events for example,

Lunar Chinese New Year (Dunne & Lusch 2008).

7.1.3 Product Design

Oasis Living can work with its parent company, Yong Lee Cloth Merchant Pte Ltd and

Europa Interiors Pte Ltd in the Research and Development (R&D) of new textiles and

design (Oasis Living 2010). Oasis Livings current designs are mostly European-focus

therefore Oasis Living may also consider working with the China textile designing centre

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so that they could inculcate Asian themed designs to cater for the Chinese consumers in

China.

7.1.4 Competitive Environment

China is the third largest country for luxury goods consumption and this had been

forecasted to grow as the Chinese willingness to spend on luxury goods is increasing

(www.lifestyleasia.com, 2008). Furthermore, Shanghai is one of the richer cities in China

whereby citizens are having higher disposable income (Runckel & Associates 2010).

Hence, it has become an attractive location for many novelty goods provider. The number

of specialty goods providers entering the China or Shanghai market is rising, creating tough

competition. Thus, to have a competitive edge over the others, Oasis Living must market

their products in order to create a strong, favourable brand image and name to its target

market (Hollensen 2007).

7.2 Promotion

7.2.1 Objectives and Strategies

Advertising objectives can be categorised according to what the companys mission is. It

can be to inform, persuade, remind or reinforce consumers (Kotler 2004). Since Oasis

Living is a new and unknown brand in China, promotions will be introducing the brand and

products to our target audiences, convey the brand image, and the difference of our

products. We will use an intercept strategy, whereby we planned to tap into the channels of

communication where these consumers are most familiar with (Kotabe et al 2008). Our

promotions will be cost effective, achieving maximum effect with a reasonable budget.

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Oasis Living will use bundle pricing as promotion strategy, in order to gain brand

recognition in China where fierce competition are numerous. Thereafter, competitive

pricing will be adopted, setting its prices around market average for the same category of

product.

Duration Objectives Strategies

Short Term

Phase 1-2

* To create awareness and to

influence prospective

customers to shop at Oasis

Living

* Employ pull strategies to

create awareness and instil

demand among consumers.

Long Term

Phase 2-3

* To promote Oasis Living

as a retailer that offers top

grade bed linens and

services at reasonable prices.

* Establishing integrated

marketing communications

mix strategies through usage

of marketing tools such as

public relations and

advertising.Table 6: Promotion strategy and objectives

7.2.2 Advertising in Luxury Magazines

The affluent in China are highly knowledgeable about luxury brands, and one source of

their information is luxury magazines (Kotabe et al 2008). One prime magazine to consider

is Prestige. Prestige is a magazine for the affluent and upward mobility in China especially

in Hong Kong and Shanghai. Prestige also benefits from a wealth of luxury brands looking

for avenues to advertise. Established in 2005, the glossy lifestyle and society magazine

targeted at Shanghais affluent readers has become one of the city's most popular

publications (www.lifestyleasia.com, 2008). Advertising in luxury magazines allows us to

reach out directly to our target customers, and send a strong image about the brand (Kotabe

2008).

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7.2.3 Advertising Through Media

Media and television are the two important mediums of advertising (Hollensen 2007). It

permits Oasis Living to reach great numbers of people on a national or regional level. It

helps build an image for Oasis Living to the targeted audience. Oasis Living can advertise

its products by using Chinese celebrities as their ambassadors such as Jackie Chan to get

viewers attention. The reason behind the popularity of celebrity advertising is the

advertisers' certainty that the brand image will be built through the use of celebrities to

achieve a high extent celebrities achieve a higher degree of attention and recall for

consumers, which will eventually lead to higher sales(Hollensen 2007).

7.2.4 SalesPromotion

The purpose of sales promotions is to provide good value, unique services and rewarding

experience to customers (Hollensen 2007). Sales promotions such as, discounts and

rebates can be offered to customers periodically. Personalized services, such as membership

benefits and special discounts may be effective to increase the number of loyal customers,

as well as develop a long-term relationship with them. (Kotabe et al 2008)

7.3 Pricing

7.3.1 General Pricing objectives and Criteria

The main pricing objective for Oasis Living bed linen is quality leadership (Table 7), using

the price as an indicator for top quality goods (Hollensen 2007). Oasis Living will be a

upmarket brand image where more emphasis will be given to quality products rather than

on price. To uphold this image, Oasis living will not resort to artificially lowering its prices

(Kotabe et al 2008). Cutting prices too drastically will not only lead customers to question

the level of quality but also image of brand. Being an exclusive product, Oasis Living will

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need to assure its consumers of the quality therefore consumers who demand quality are

prepared to pay a reasonably high price for Oasis Living products (Dunne & Lusch 2008).

The stage of the company start-up process in China is another criterion in determining

prices. Other additional costs such as distribution are also considered in the final price.


Short Term

(within 3 years)

* To establish the firms

brand image in Shanghai as

a quality luxury bed linen

manufacturer.

* Psychological Pricing

Strategy and Quality

Leadership approach.

Long Term

(After 3 years)

* To gain a substantial

market share and endeavour

to become the leading bed

linen manufacturer and

retailer within Shanghai.

* Value-Based pricing

approach and Psychological

Pricing Strategy

Table 7: Pricing strategy and objectives

7.3.2 Pricing Method

A value-based pricing method will be used. The luxury line will be priced competitively,

comparable to the market prices of quality bed linen (Hollensen 2007). In Value-Based

pricing, the buyers perception of value is the key to pricing. Oasis Living will fix the target

price of luxury bed linens based on its customer perceptions of the product value and brand

image (Kotabe et al 2008). Some consumers place great value on the intangibles they

receive from the product such as its quality (Kotler 2004). Hence, in addition to adopting a

Value-Based Pricing, Oasis Living will offer a combination of high quality exclusive linen

coupled with an emphasis on every sales executive to promote excellent after sales service

to every customer.

7.3.3 Price Discounts

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The listed price for the products will not be changed, but discounts can be given at

appropriate times such as seasonal sales or prior to the Lunar Chinese New Year. Since the

type of demand for bed linen will vary over seasons, Oasis Living can offer seasonal

discounts to reduce the impact of seasonal variation on sales (Dunne & Lusch 2008). This

also helps to clear existing stocks from the previous season so that Oasis Living can free up

its inventory space for new stock(Dunne & Lusch 2008). Oasis Living can also give special

discounts to walk-in customers who visits their gallery.

7.4 Place

Place refers to a location whereby the products are easily accessible for an exchange to take

place (Kotabe et al 2008). In framing out the buyer behaviour analysis, our target customer

will most likely visit upmarket shopping districts in China to make purchases. Location of

point of sale also depends on the strategic partner chosen (Dunne & Lusch 2008). We has

chosen Qibao Mall in Shanghai which was set up by CapitaRetail China Trust, a real estate

investment trust of Capitaland as Oasis Living first store based retail space counter. Qibao

Mall is located in Minhang district, a growing mid to high end residential locality to the

west of Shanghai Central Business District. The mall is positioned as a one-stop family

shopping destination, providing shopping, dining, entertainment options and services for

the middle-class residents living in the vicinity (Capital Retail 2010).


Short Term

Phase 1

* To gain market share and

making use of reputable

retailing malls as Oasis

Living is relatively new.

*Select a strategically

prominent retail mall with

numerous well known

brands that portrays a

upmarket image.

Long Term *To locate suitable sites for *Expand distribution once

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Phase 2-3

(After 3 years)

future expansion plans

within China.

brand name is established

and well received.Table 8: Placing strategy and objectives

7.5 Marketing Mix Conclusion

Once Oasis Living has successfully built a reputable name for itself in China and a sizeable

customer database, it may look into joint venture with other textile company in China while

also introducing more of its products and services. The future of Oasis Living store located

in China would push it competitive edge up another level and act as a prototype before

further expansion.

8.0 Implementation Plan

The Implementation plan shown inFigure 4 will be divided into three separate phases.

These are the preparation phrase which will last from May 2010 to April 2011, the

implementation phrase which will last from May 2011 to April 2012 and the evaluation

phrase which will last from May 2012 to April 2013. Below are the key marketing

strategies drawn out in a GANTT chart showing the important activities from 1st May 2010

to 31st April 2013.

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Phase 1 - Preparation Phase

May-Aug 2010 Sep-Dec 2010 Jan-Apr 2011

Hold a General Meeting to

explain expansion plan to staff

Organize programs to prepare

employees for change

Set companys goal and convey

it to the staff

Prepare a management team who

will lead operations in Shanghai

Organise training to make sure

management team are well

versed in speaking Chinese and

understanding the culture there

Prepare all the necessary

documentation required to start a

retail space counter in Shanghai

Negotiate with the shopping

centre in Shanghai for support

Advertisements to be displayed

in Shanghai to begin promoting

the brand

Phase 2 - Implementation Phase


Advertise in newspapers, internet

and magazines Advertisements on radio and

television

Regular visits to the counter by

upper management to ensure

operations are on track

Monthly review (Ongoing)

Phase 3 - Evaluation Phase


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Conduct a survey to find out how

to improve the business

Begin collecting and analysing

customer feedback

General meeting to review if

objectives have been met

Staff brainstorming session to

analyse data and find out what

improvements can be made

Begin plans on considering

whether it is feasible to open

more retailing space counters in

other cities or countries

Figure 4: Implementation plan

9.0 Proposed Budget

9.1 One-Time Start-Up Cost Estimates (1 retail space counter)

1 SGD = 4.73 RMB(Untied Overseas Bank 2010)

Activities Cost (RMB) Cost (SGD)

Business Fixtures,

Equipment and

Installation

RMB 120,000 $25,370

Decorating RMB 60,000 $12,685

Starting Inventory Cost RMB 70,950 $15,000 (300 sets at SGD

$50 each)

Office Supplies RMB 1,600 $338Utility Deposits

(3 month advance utility

fees)

RMB 3,000 $634

Legal Fees

(Fees paid to legal advisor

and lawyer)

RMB 8,000 $1,691

Licenses and Permits RMB 800 $169Insurance RMB 40,000 $8,457

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(Fire and safety Insurance)

Initial Advertising Cost

(TV advertisements,

Newspapers, Public

Relations, Magazines, etc)

RMB 160,000 $33,827

Petty Cash

(Cash to reimburse

stationeries and office

supplies)

RMB 1,200 $254

Total One-Time Start-UpCosts

RMB 465,550 $98,424

Table 9: One time start up costs

9.2 Monthly Expenses

Activities Cost (RMB) Cost (SGD)

Employee Wages

Store Manager (x1)

Sales Executives(x3)

RMB 8,000

RMB 18,000 (excluding

commission)

$1,691

$3,805

Rent RMB 15,000 $3,171

Utilities RMB 1,066 $225

Insurance RMB 3,332 $704

Advertising RMB 12,000 $2,536

Total Monthly Expenses RMB 57,398 $12,132

Table 10: Monthly costs

10.0 Conclusion

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Due to the small market in Singapore and the effects of rapid globalisation, Oasis Living

has no other alternative but to explore market potentials abroad in order to expand its

business so as to remain competitive within its industry. There is a high chance that Oasis

Living will be successful in entering the bed linen industry market in Shanghai, China. This

is due to the countrys healthy and vibrant retail industry which boasts the greatest market

potential as compared to any other country, mainly because of its more than 1 billion

potential consumers. In addition, Shanghai has a relatively stable government and economic

policy. Furthermore, there is market potential in Shanghai as it has a moderately attractive

industry for luxury goods. Together with the implementation of a good marketing mix,

Oasis Living will likely be able to enjoy much success by expanding into the bed linen

market industry in Shanghai.

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