Introduction
HFT is a leading retailer of Chinese herbal drinks, soups and tortoise herbal jelly with over one third of market share in Hong Kong. It is dedicated to providing “naturally made, wholeheartedly good” products without additive for whole family. However, it is stuck in an embarrassing situation when it launches their products into the mainland market. Thus, in order to turn its situation around, we are going to analyze key success factors of HFT in Hong Kong and identify the problems they encounter in mainland China, then we will bring up evaluations of three alternatives provided and our strategy recommendation.
Success factors
What contributes to its glorious success in Hong Kong? Below is our analysis, organized by the key factors
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HFT has established a distribution system with combination of direct sales and indirect sales. Direct sales such as retail stores, which are mainly located at the MTR station, precisely meet the needs of target customers, providing convenience in terms of time, places and accessibility. In addition, indirect sales in the form of cooperation with third-party retailers effectively expand the accessibility of its products. Meanwhile, distinct products are carefully selected to be sold in different channels, which has largely reduced channels conflict. Furthermore, it prudently controls the number of franchises, which ensures its control over channels and maintains its service and products level. Thus, HFT’s effective distribution channel mix largely boosts its sales, insures its control upon channels and endows it with flexibility in face of rapidly changing …show more content…
Why should HFT choose the first strategy?
Firstly, cooling tea is part of HFT’s brand culture and reveals HFT’s belief in the benefits of healthy diet and natural ingredients. To some degree, it is cooling tea that finally built HFT’s traditional and reliable image. Although now the sale and promotion of cooling tea are facing great difficulty in mainland China, HFT cannot abandon this business. Otherwise HFT will not only waste its strength but also face a potential threat in promoting its product concept “Naturally Made, Wholeheartedly Good”.
Meanwhile, the success of WLJ has shown that it is possible for cooling tea to gain popularity in mainland China. Due to the common belief in the internal cooling effects, the popularity of HFT’s cooling tea is just a matter of time if good promoting methods can be used. By that time, the large market potential may be well captured by HFT because up to now there hasn’t been any brand in the high-end herbal tea
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