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Nongfu Spring

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MCV Research of Nongfu Spring Limited Company to Craft market Strategy

    Content Page

    Abstract……………….…………………………………………………………………………..…………..2 Introduction………….…………………………………………………………………………....…………..2 Propose…………………………………………………………………………………………………………2 The Business Market Process…………...…………………………………………………………...………………2 The concept of value…………………………………………………………………………...………………2 General situation of Nongfu Spring Limited Company……...………………………………...………………3 Competitors……………….…………………………….…………………………………………...………………3 Market share of Nongfu Spring Limited Company…………………………………..…………...…………………4 SWOT analysis about Nongfu Spring Limited Company………………..…………………………………….4 Methodology…….….…………………………………………………………………………………………5 Results & Analysis……………………………………………………………………………...……………..6 Part 1………………………………………………………………………………………………………...6 Part 2……….………………………………………………………………………………………..…………9 Discussion...…………………………………………………………………………………………………..13 Recommendation……………………………………………………………………………………...……..14 Reference……………………………………………………………………………………………………..15 Appendix……………………………………………………………………………………………………..16

2200507200411 Page 1 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy

    Research of Nongfu Spring Limited Company to Craft market Strategy

    Abstract

    In this report, the author mainly researches Nongfu Spring Limited Company to craft market strategy that bases on the value. First of all, the author introduces the general situation of Nongfu Spring Limited Company, its product, competitors and market share; but also the author analyzes SWOT of Nongfu Spring Limited Company. The second, the author collects much information through interviewing marketing manager of Nongfu Spring Limited Company face to face and doing the questionnaire for consumers. The third, the author discusses that Nongfu Spring Limited Company makes consumers understand its products

    value through crafting market strategy successfully.

    Introduction

    ; Propose

    The author investigates that how Nongfu Spring Limited Company makes consumers understand the value of product through crafting market strategy.

    ; The Business Market Process

    The Business Market Process

    Managing New Business Market Gaining Market Offerings Channel Sensing Customers Offerings Realization Management

     Understanding Sustaining Firms as Reseller Understanding value Customers Partnership

    Creating value

    Sustaining Crafting Delivering value Customer Market

    Relationships Strategy

    Source: James C. Anderson & James A. Narus. July 2007, p5

    ; The concept of value

    “Value in business market is the worth in monetary terms of the economic, technical,

    service, and social benefits a customer firm receives in exchange for the price it pays for a

    market offering.” (James C. Anderson & James A. Narus. July 2007, p5)

    2200507200411 Page 2 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy ; General situation of Nongfu Spring Limited Company

    Nongfu Spring Limited Company is built in September 1996;it is the largest professional drinking water

    company in China. Nongfu Spring Limited Company mainly produces bottled drinking water, and its core product is natural drinking water (The reader could look at picture). Its core brand is “Nongfu Spring”; this

    brand has gotten good brand loyalty from consumers already, but also the brand capital is growing persistently (www.nongfuspring.com. 2006).

    Source: http://www.nongfuspring.com/wh_detail.htm

    Since 1997, Nongfu Spring Limited Company has build up seven international-leading production bases of bottled drinking water in the China first-class water resource preservation zone in succession; such as the high-quality water resource and world-leading production equipments of Nongfu Spring Limited Company that is unique in drinking water industry all over the China (www.nongfuspring.com. 2006). Nongfu Spring is conferred on “Chinese Famous Brand” by General Administration of Quality Supervision, Inspection and Quarantine of the People‟s Republic of China in September 2003. Besides, AC Nielsen

    Company released the report about Chinese consumption market, and it revealed Nongfu Spring is one of the six most popular brands of consumer goods in China (www.nongfuspring.com. 2006).

    ; Competitors

    Before 1995, the most drinking water companies produced mineralized water in bottled drinking water industry of China; but by 1998, with the high-speed development of bottled drinking water produced; at

    present, the variety of bottled drinking water are purified drinking water, mineralized drinking water, mountain spring and pure distilled drinking water in China bottled drinking water; but also they have its consuming 2200507200411 Page 3 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy groups each. With the rapid popularity of the scientific consumptive concept and drinking concept, the consumers could choose the products according to their needs. And then this situation causes more keen competition in bottled drinking water market. In the China market of bottled drinking water, national bottled drinking water companies have been all drawn into the competition of drinking water market (www.333cn.com. September 2006).

    At present, bottled drinking water market is one of the highly perfect competition markets in China, so this markets saturation is high too. There are lots of new brands get into bottled drinking water market every year, but just a few companies can obtain success in this market. Today, there are three companies occupy the most market share, because they have real actual-strength; they are Wahaha, ROBUST and Nongfu Spring. So Wahaha and ROBUST are all main competitors of Nongfu Spring (www.333cn.com. September 2006). ; Market share of Nongfu Spring Limited Company

    China General Chamber of Commerce and All-China Federation of Industry & Commerce Jointly released the report to show: in national main brands of bottled drinking water, the comprehensive market share of Nongfu Spring already had become the top in the whole country from 2004 to 2007 (www.333cn.com. September 2006).

    The Market Share of Nongfu Spring Limited Company

    From 2004 to 2007

    33.323528.2230

    2519.63

    16.3920Market Share

    15

    10Market Share (%)

    5

    0

    2004200520062007

    Year

    Source: http://www.333cn.com/bbs/viewthread.php?tid=108611

    ; SWOT analysis about Nongfu Spring Limited Company

    Strengths: (1) Nongfu Spring Limited Company has become the largest professional drinking water

    company in China.

    2200507200411 Page 4 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy

    (2) Nongfu Spring Limited Company pays attention to make plan for products and

    establish the terminal of retailer.

    (3) Nongfu Spring Limited Company always renews marketing principle according to the

    situation of market.

    (4) Since 1997, Nongfu Limited Company has build up seven international-leading

    production bases of bottled drinking water in the Chinese first-class water resource

    preservation zone. So Nongfu Spring has the strength of high-quality water resource.

    Weakness: (1) There is only native capital, so this is a weakness compare with Wahaha and

    ROBUST.

    (2) Nongfu Spring Limited Company is not good at establish the channels of selling and

    distributors.

    (3) The costs of transport and selling are higher than Wahaha and ROBUST.

    Opportunities: (1) The prospect of drinking water market is good, and there is a large potential.

    (2) With the development of consumption level and health notion, the consumers get used

    to buy bottled drinking water

    (3) The consumers need health and natural drinking water, and high-quality water resource

    of Nongfu Spring can make consumers‟ demands are satisfied.

    Threats: (1) There is the keen competition in the drinking water market.

    (2) There are three magnates in the China drinking water market; they are Wahaha,

    ROBUST and Nongfu Spring. The situation that they stand like the legs of a tripod

    will not change in a short time.

    (3) Because Wahaha and ROBUST cooperated with France Danone in succession, so there

    are lots of foreign capital to develop Wahaha and ROBUST, and these two brands have

    capital strength.

    (4) Nongfu Spring Limited Company has to rely on lots of wholesalers and distributors to

    distribute its products.

    Methodology

    nd; The author interviewed the marketing manager of Nongfu Spring Limited Company face to face on 22

    May 2008. This marketing manager is a man, his name is LI Qiang and his age is 42. The author directly

    got much useful information about Nongfu Spring Limited Company crafting market strategy through 2200507200411 Page 5 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy

    interview.

    th; On 25 May 2008, the author stochastic chose 100 people to do the questionnaires on the Chun Xi Rode.

    Through this methodology, the authors could get the feedback from consumers and know whether

    consumers understanding the value of Nongfu Spring are or not.

    Results & Analysis

    ; Part 1: The author interviewed the marketing manager of Nongfu Spring Limited Company face to face. The respondent of research Marketing manager of Nongfu spring Limited CompanyLI Qiang

    ndThe time of research AM. 10:00 on 22 May, 2008

    The place of research The office of LI Qiong

    The methodology of research Interview face to face

    Question 1: What is the brand orientation of Nongfu Spring bottled drinking water? Answer: When the national bottled drinking water market was in price war and low profit, Nongfu Spring entered this market. Nongfu Spring Limited Company didn‟t launch low-grade bottled purified drinking

    water such as Wahaha and ROBUST, and it launched high-grade bottled natural water which is mild alkalinity and containing many kinds of nutrition; this kind of product form brand differential effect. Nongfu Spring Limited Company actively publicize natural water has the advantage of health and natural that causes tremendous impact to Wahaha and ROBUST.

    Question 2: What is the selling point of Nongfu spring?

    Answer: Natural drinking water is the selling point. Although Wahaha and ROBUST all produce purified drinking water, and some scientists found out that purified water is not good for health through research. Because when they are filtrating bad things in water, micro-elements that necessary to bodies are filtrating. Although Water-Purification Technology work out the problem of water polluted, waters‟ abilities of

    dissolution, infiltration and metabolism will decline.

    World Health Organization released the report to show that the level of body‟s PH is a mark to measure the health or not (The reader could loot at the table).

    PH value of the human body Healthy situation of the human body

    7.37.8 (mild alkalinity) Health

    Lower than 7.35 Subhealthy

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    MCV Research of Nongfu Spring Limited Company to Craft market Strategy Lower than 7.2 (mild acidity) People is easy to fall ill, and immunization ability is low

    This file shows that drinking water of mild alkalinity has three advantages. First of all, the drinking water of mild alkalinity has 100% rate of restraining germ through test of World Health Organization; this kind of water has function of resisting germ and discharging toxin after passes into human body. The second, the drinking water of mild alkalinity could adjust the PH of human body voluntarily after passing into human body. When the PH of human body is adjusted to mild alkalinity, the immunization ability will be improved; and the quality of sleep and appetite will be improved. The third, if consumers use the drinking water of mild alkalinity to cook, and then the food will be delicious, but also the food could endure to decay. In other word, these advantages are value of the drinking of mild alkalinity.

    Nongfu Spring launched natural drinking water is mild alkalinity drinking water, so Nongfu Spring

    Natural Drinking Water has above-mentioned values. Nongfu Spring Natural Drinking Water is healthier

    and more scientific than the purified water of Wahaha and ROBUST. Especially, in the Shanghaithe largest

    industry city of China, “Nongfu Spring Natural Drinking Water” becomes a very good selling point

    obviously. So Nongfu Spring has is not only water resource that Wahaha and ROBUST do not have, it is the brand image resources that a kind of other brands can't be substituted even more.

    Question 3: Where is the water resource of Nongfu Spring from? Why does the Nongfu Spring Limited Company adopt this kind of water resource?

    Answer: The water resource of Nongfu Spring Limited Company is come from the China first-class water resource preservation zoneChang Bai Mountain and Qian Dao Lake; the water resource here has not been

    polluted. The water resource here has the features that are natural and mild alkalinity, so the water resource here is good for establish brand image.

    In fact, there is not strong technology barrier in the bottled drinking water market. Generally, as the drinking water company, its success is from brand effect; and this kind of brand effect comes from promotion strategy and brand image. So brand is the most obstinate barrier of bottled drinking water market. Although the water recourse is not very necessary to produce bottled drinking water in technology aspect, it is very important to brand image.

    Question 4: How to make consumers understand the value of Nongfu Spring bottled natural drinking water? Answer: The value that Nongfu Spring Limited Company wants to make consumers understand most is the 2200507200411 Page 7 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy value of natural drinking water. About this question, Nongfu Spring Limited Company has two methods to solve it.

    The first one is TV advertisement. Nongfu Spring Limited Company broadcast the advertisement on the CCTV; the core idea of this advertisement is health life needs natural mild alkalinity drinking water. The scenes of advertisement is chosen in the supermarket where consumers relatively concentrate; some young men are curiously looking at seller test the PH of Nongfu Spring bottled natural drinking water, and Nongfu Spring bottled natural drinking water is mild alkalinity through test. And then the seller tells the advantages of mild alkalinity drinking water to these young men. We call this advertisement “Nongfu Spring PH paper

    Advertisement” temporarily.

    Generally, many consumers are rational while they are doing the decision of buying. But because the most consumers are limited by themselves knowledge and experience; so this kind of ration is just from current knowledge and experience, or educated by producer through advertisement. When the advertisement tells consumers what the rational choice is, and then the advertisement is becoming the tool of theory educated. Because ration is good for consumers, so they will learn and confirm the rational knowledge from advertisement without the least hesitation, and then reach consensus with the question explained in advertisement.

    Nongfu Spring PH paper advertisement” makes best use of consumers learning and confirming rational knowledge; this advertisement makes consumers‟ rational knowledge to be grown in form of education. This

    advertisement is close to daily life, so it is easy to cause consensus with consumers. After watching this advertisement, when the consumers choose and buy the bottled drinking water in the supermarket, they will feel intimacy with Nongfu Spring natural drinking water, and this kind of intimacy is possibility to cause the result that is buying. This advertisement does not make use of hollow advertisement languages to tell customers water is very healthy, it makes consumers understand why Nongfu Spring natural drinking water is health drinking water through test. So this advertisement makes consumers understand the value of Nongfu Spring natural drinking water more real.

    On the other hand, is the promotion on the street? The company sends lots of promotion personnel to the supermarket, the store or street, distribute the PH paper and manual to consumers. The content of manual contain how to test the PH of drinking water through PH paper, how to discern PH of drinking water, and introducing Nongfu Spring natural drinking water as mild alkalinity drinking water has lots of advantages. 2200507200411 Page 8 of 17

    MCV Research of Nongfu Spring Limited Company to Craft market Strategy When the consumers get PH paper and manual, they will be interest in trying it. And the consumers can know and trust Nongfu Spring is good for human body after testing themselves, and they will buy it. In fact, the purpose of this method is same to the first method; they all makes consumers understand the value of Nongfu Spring natural drinking water more real.

    Question 5: How much does your company invest in the advertisement? How about comparing with your competitors?

    Answer: There is a table to show the contrast of Nongfu Spring, Wahaha and ROBUST invest in advertisement in 2006.

    Brand Nongfu Spring Wahahah ROBUST

    Capital for investing advertisement (Million) 163 150 97.2

    To sum up, the core competence of Nongfu Spring is Nongfu Spring natural drinking water. The water resource of Nongfu Spring natural drinking water is come from the China first-class water resource preservation zone, this kind of water resource is mild alkalinity and has not been polluted which is the greatest advantages of producing Nongfu Spring natural drinking water; and that is the value of Nongfu Spring natural drinking water also. At the same time, Nongfu Spring Limited Company makes consumers understand the value of Nongfu Spring natural drinking water through TV advertisement and promotion in street. Nongfu Spring invest advertisement is more than its competitors.

    ; Part 2: The author stochastic chose 100 people to do the questionnaires on the Chun Xi Rode (the reader

    could look the Appendix).

    The respondent of research Stochastic chose 100 people

    thThe time of research PM. 15: 00 on 25 May, 2008

    The place of research Chun Xi Road

    The methodology of research Questionnaires

    2200507200411 Page 9 of 17

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