Brand’s Market Analysis Essay

However, other faults argon engaging in more aggressive advertising and increasing pit aw areness, bridging the gap of perceived difference between labelS and their step-ups, and go buyers more choices, at that placeof buyers drop total baron. Supplier bargaining power blemishS ingredients are of importly chicken essence and a small proportion of caramel. Although these ingredients are comparatively easy to procure, in that location is soaring regulation from authorities restricting the number of suppliers, because of the late 2004 avian flu which prompted authorities to step in to tighten regulations on the lumber of avian crops2.Due to loyalty to ingredient supplier since 2004, and the fact that few suppliers are qualified and approved by authorities, noticeS is assured of the fictional character of its ingredients, but suppliers enjoy high bargaining power because of its quality assurance. threat of modern entrants There are high fixed personify collectab le to harvest-tideion method and machinery, and seasonal petitions during critical periods much(prenominal) as examinations, as well as market saturation and high existing label equity with other exertion competitors.This takes a high barrier of immersion collect to high start-up capital and high economies of scale. discolourationS recent entry to the health supplement market, has heightened the threat of smart entrants (e. g. InnerShine series3), as these products do not enjoy similar consumer loyalty and new-fashioned entrants rat sham them. Despite extensive brand expression, threat of entrants is overall medium. Threat of substitutes Substitutes of check offS acknowlight-emitting diodege mainstream health supplements, which may appeal to consumers who do not like the bitter taste of BRANDS traditional products.In response, BRANDS has diversified their product line to include tablets. Moreover, BRANDS has al shipway been active in look for and recently ascertaine d the link between consumer benefits to an active involved4 in its products. This is in contrast to its substitutes, especially western health supplements, who collect prided themselves on a large report of research and the ability to back its products with scientific foundations. Despite this, threat of substitutes is medium as BRANDS health supplements are relatively new. persistence contender In actuality, BRANDS products have little difference with its competitors and there are more or less similar marketing target segments because BRANDS competitors are able imitate its marketing strategy5. Growth in demand of much(prenominal) products as a result of increasing rivalrous environments has allowed competitors to capitalize on the high demand from a spectrum of consumers. As a result, BRANDS direct competitors outlay their products dishonor than BRANDS and appeal to price-sensitive consumers, thus leading to a relatively unafraid rivalry.BRANDs recent foray into the mai nstream health supplements market similarly uncovered itself to great arguing because of existing industry players, giving it an uphill toil to gain market share. As a result, industry opposition is relatively intense. In conclusion, bulletproof brand equity empowers BRANDS and reduces threats from buyers and new entrants. Overall competitive environment was medium high due to advocateures from substitutes, suppliers and competitors which take CPL to adopt the strategies below. 2. Competitive Strategies adopted in 2009 and 2010 CPL primarily uses center specialism strategy, coupled with some elements of cost lead strategy, during the period 2009 to 2010, which enabled it to survive the challenge environment and gear itself towards sustainable ontogenesis in the type Ale run. cruel industry competition during the period has led to CPL being active in its brand building strategy with various impart. Some of these include engaging brand ambassadors, outreach on televisi on media and organizing study camps.This brand focal point strategy has resulted in perceived uniqueness of their product, scour though there are competitors with similar physical products. In a bid to change over consumers of its uniqueness, it has invested in research facilities to fork up scientific backing to its products. The successful overt of its discovery impart lend further credence to its advertising and products which willing put up it harder for its rivals to imitate its marketing strategy. Focus strategy is evident through marketing strategies targeted at students. Collaboration with schools and the organization of student events (e. . Sudoku competitions, summer camps) have enabled CPL to cleanse its outreach to students. This is in response to the increasingly competitive education systems in Singapore and China, where students will be inclined to take supplements that are deemed sound to the well-being of the mind. The globular recession of 2009 and decli ning sales forced CPL to rethink a low cost strategy, in response to more price-sensitivity among consumers, and rising price of ingredients. This is illustrated in its continual force expansion, allowing it to enjoy future tense economies of scale.The increase in volume of production will allow it to spread its fixed be over a larger quantity, reducing its average unit cost of production. gainmore, investments in specialized technology6 for the manufacturing process will likely result in higher(prenominal) efficiency and land average cost in the prospicient run. Price negotiations to mitigate upward pressure7 in ingredient prices also help oneself to hold unit costs low. In the event of future recessions, CPL will be able to respond and translate lower prices to consumers through promotions and offers.To conclude, even though BRANDS is not a price leader in the industry, its desire term low cost strategy in bringing subjugate its production cost, along with increased inve stments in brand building to set up product uniqueness, will allow it to reap increased profits in good times. Where times are bad, CPL after part afford to lower change prices and lock up make healthy profits. 2. 3 Top Three crease Risks and Counter-measures Risk 1 Declining market shares and strong competition Strong competition from existing competitors present a threat to BRANDS stand up in the market.BRANDS has lost market shares in peach oral aid products8 and Innershine products in countries such as Malaysia while competition in other countries remains intense. In response to the competition, CPL acquired in active advertising to improve brand image and increase outreach. Campaigns order to improve sales of specific products are also held resulting in authoritative effect in capturing customers attention to BRANDS products. Innovative ways to increase sales such as boxlike shop retailing, blogs and increasing of sales channels to cosmetic shops9 has helped to gain a competitive advantage and modernize their image.CPL has also carried out extensive research for BRANDS to scientifically assure the benefits and safety consumption of their product which no other company had done so for this category of products hence winning over customers approval and loyalty. Risk 2 Decreasing sales due to the world(a) economic recession The global economic recession has made a declining effect on the sales number for BRANDS product. However CPL had manage to minimize the effects of the recession by investing heavily on research amp development and subject building allowing them to stay resilient in the battle arraycase of the recession.Up to date technology to transform operations to be in full automated has allowed CPL to decrease cost of production and increase product payoff hence maximizing profits during the recession. The investment in increasing capacity includes construction of factories costing a total of 2. 45 billion baht10 and hatchway of I ndonesia offices. This move coupled with aggressive marketing sales strategy aims to increase their presence in the market and improve sales in the short-change run while the construction of the factory aims to allow CPL to increase their conflict and secure a larger market share in the long run.Risk 3 Decrease consumer confidence in BRANDS products News reports of a recall of essence of chicken products in the United States spark1ed some leaning amongst consumers11. In addition, just as the business in the Peoples Republic of China (PRC) was beginning their operations, food safety concerns caused by the cyanuramide food scare12 significantly affected consumer sentiment. Above this, news of the import exile on BRANDS products spread worldwide, affecting the business segment. Fortunately, BRANDS subsequently stepped out to apologize that the cause of the import ban was a result of compliance issues13.CPL also affirmed its commitment to quality assurance through various press rel eases to ease consumer sentiments14. 2. 4 Overview of Value Chain Activities We have determine the mensurate chain activities that enable CPL to stay ahead of competitors, in particular, support activities such as research and development and human resource commission provide BRANDS the extra edge in the industry and primary activities such as operations, advertising, brand building and work distinguish BRANDS from their rivals.CPL has affirmed its commitment to look for and Development by launching the BRANDS Health Science Centre and they have discovered the active compound in their health product which is believed to put forward mental performance. Work is still done to further understand how to maximize the uses of the compound for consumer benefits15. As a result, BRANDS product credibility in the industry will be improved with the backing of this scientific discovery. This discovery of this compound Probeptigen will help to distinguish BRANDS from its rivals and increase customer loyalty.Finding ways of harnessing the active compound in different ways should be the next step that CPL works towards to, and will aid its differentiation strategy if new and innovative products can be released with its findings. Human resource management is identified as key to the organization16. This is important to the development of the next generation of leadership and talent retention and particularly relevant as a strong management team will be vital to steer the waves of future recessions. A highly efficient management team will create value for shareholders and maintain the pristine image of BRANDS products to consumers.Efforts are made to engage employees, develop leadership skills and align the right behaviors and values across the organization17. Further improvements can be made by providing quality training to service staffs with higher emphasis on after sales services. For operations, CPL has been actively expanding its manufacturing facilities, allowing them to amend match its production capabilities with the growing demands. Increased output volume helps in its long-term low cost strategy by reducing average unit production costs. Enhanced manufacturing capabilities enable BRANDS to diversify and offer new products with special features.This allows CPL to serve various consumer needs and provide more product choices, which aid its differentiation strategy. Improvements to the manufacturing process are made through adeptness of latest technology to increase efficiency and reduce waste. CPL can improve its existing operations by developing new distribution channels to cope with higher output capabilities. This helps prevent bottlenecks in its grant chain. denote and brand building activities help to transform consumer mindsets, as well as contemporize product image.Conventionally viewed as traditional health products for medicative purposes18, new branding strategies repositions BRANDS with brain-enhancing functions. With these activities, BRANDS can increase the cleverness of its focus differentiation strategy. Increased industry competition led CPL to kindle the uniqueness of its products from its close competitors. Appealing to students and young adults via brand imaging strengthens its focus strategy. Improvements are made with research and patents to provide scientific foundations to its products.Further improvements can be by capitalizing on these scientific insights to explicitly educate consumers on the specific benefits of each product to achieve full effects of its brand building strategy. Service in the organization adds value to consumers through its customer relationship management (CRM) policies. In a saturated industry, close similarities with rivals can be mitigated with unique after sales services and quality consumer experiences. This helps BRANDS to connect with its consumers on a more personal level, and allow it to leverage on customer insights to best(p) anticipate demands19.This is particularly important for BRANDSs focus differentiation strategy as it reduces the time BRANDS takes to rectify product errors or push out new products by reconciling its supply side capabilities with the demand side factors such as change in consumer preferences. CRM initiatives are constantly being reviewed and improved in the organization by benchmarking its quality against service industry averages19. In addition, human resource management is important as such after sales services require quality labor inputs, which require constant retraining of employee. . 1 reheel of Financial Ratios Liquidity amp Efficiency 2008 2009 2010 Current Ratio 1. 56 1. 70 1. 69 Quick Ratio 1. 21 1. 23 1. 27 Cash Ratio 0. 65 0. 59 0. 73 Assets Turnover 1. 19 1. 20 1. 35 Fixed Assets Turnover 5. 87 4. 40 4. 37 Inventory Turnover 4. 59 4. 07 4. 60 age to Sell 79. 52 89. 68 79. 35 Receivables Turnover 7. 81 7. 37 8. 35 Days to Collect 46. 73 49. 53 43. 70 salaryability 2008 2009 2010 Gross impro vement moulding 50. 24% 49. 72% 47. 93% Net Profit delimitation 11. 35% 11. 73% 12. 09% eliminate on Assets 13. 8% 14. 09% 16. 29% Return on Fixed Assets 66. 63% 51. 63% 52. 81% Return on Equity 23. 66% 24. 49% 28. 06% Earnings Per Share 25. 72 cents 26. 29 cents 32. 68 cents Solvency 2008 2009 2010 Debt Ratio 42. 64% 42. 35% 41. 56% Times reside Earned (TIE) Ratio 19. 71 30. 77 49. 32 Selected business segments swages (in millions) 2008 2009 2010 BRANDS Liquids 403. 7 431. 0 503. 7 Eu Yan Sang (EYS) scandalmongering Essence21 6. 1 6. 1 8. 6 Woh Hup Sauces 159. 3 138. 3 171. 0 3. 2 Comments and Explanations of Financial RatiosDebt ratios venomous between 2009 and 2010, scorn similar amount of borrowings account on the balance sheet. Total assets grew as a result of capacity expansion, investment gains and increased cash holdings. In particular TIE ratios fell because borrowing rates were lowered22 in a bid to stimulate the economy. The recovery of the economy posted a hik e in turnover and profits, which led to a surge in TIE ratio. As part of the hosts commitment to maximize shareholder wealth, ROE and EPS values rose. The decrease debt ratios showed the collections emphasis on funding through knowledgeable growth and reduced reliance on external financing.This also indicates the Groups attitude towards shareholder value creation, in which a long term approach is employed, without leveraging on higher debts to fund short-run growth which could run the risk of financial bankruptcy. Gross Profit gross profit fell from 2009 to 2010. The Group experienced upward pressures in prices of commodities, such as raw birds nest, coffee and sugar during the period23. Despite the higher dollar amount of turnover in 2010, the price pressures impacted costs of sales which outstripped the growth in turnover. This led to lower Gross Profit Margin in 2010.However, Net Profit Margin rose fairly by 0. 36%. Though there were higher expenses incurred from increased investments in branding, research and development, growth in turnover managed to keep pace with this rise. The main reason for the slight increase in Net Profit Margin in 2010 was due to foreign exchange losses24 experienced in 2009, which arose as a result of the Groups foreign currency purchases and skill of foreign businesses such as Tobys Estate. Against the backdrop of the global recession, this translated to substantial foreign exchange losses, impacting Net Profit Margin in 2009.The Groups liquidity position was very weak in 2009. Despite the similarity in current ratios between 2009 and 2010, the Group held intimately lesser cash during 2009, evident from its cash ratio. Both the inventory and receivables turnover ratio indicated that a large proportion of current assets were tied up in receivables and illiquid inventories. This was probably a result of lower consumer sentiment due to the effects of the financial crisis. Certain business segments, such as sauces and bevera ges25, suffered lower turnover. This caused inventory to pile up, and is illustrated in the huge spike in inventories in 2009.To encourage customer purchases, the Group probably extended credit to customers which resulted in higher proportion of credit sales experienced. Dividend pay-outs averaged 25 cents a share26 despite slowing growth. Moreover, investments in manufacturing, research and brand building continued amidst the downturn. As a result, the Groups cash outflows outpaced inflows, which jeopardized its liquidity position of 2009. In 2010, liquidity position improved, as capacity expansion and brand building in the preceding years allowed it to capitalize on the recovering economy.Its CRM constitution also allowed it to leverage on consumer feedback and enabled it to handle the surge in demand timely. Turnover for 2010 spiked as a result, which led to better operational cash inflows. The Group made heavy investments in fixed assets in 2009 and 2010, such as the launch ma nufacturing plants in Malaysia and Thailand, and building of offices in Indonesia. The fairly similar fixed asset ratios indicated that sales and profits were able to keep pace with these extensive investments, an indication of effective utilization of manufacturing resources.Despite this, there is definitely room for improvement, as higher investments should warrant a multiplier effect on sales in the long run, and lead to better fixed asset ratios in future. Comparisons of the turnover in business segments show that despite stagnation in EYS chicken essence in 2009, strong brand equity in BRANDS products allowed appreciable growth in BRANDS liquids. However, this figure is not wholly vocalization as within the category of BRANDS liquids, relatively newer liquids such as BRANDS InnerShine do face stiff competition into its market share.Growth in BRANDS liquid is in the main attributed to the flagship product of chicken essence, highlighting the strong branding that BRANDS traditi onal products enjoy. Moreover, chicken essence is neither the flagship product of EYS, which explains the relatively lower turnover figures. In the sauces industry, the general decrease in turnover in 2009 was probably due to decrease in number of people eat out and the perception that sauces were non-essentials during the 2009 recession27.Despite the turnaround growth in 2010, Woh Hup Sauces still faces stiff competition from close rivals28. In conclusion, we believe that CPL is well positioned to make further inroads into its different business segments with the recovery of the economy. With its competitive strategies, and coupled with a prudent management team, we believe CPL will be able to thunder in the competitive environment and improve its financial position in the future.