Economic/Financial Factors

Tasmanian Mountain Waters in a Tasmania (Australia) based company that packages and distributes natural mineral water. The company collects and distributes fresh rain water collected from mountain springs and waterfalls, rich in minerals. Their motto is “to take nature’s perfect water and present it to the consumer in the most natural form” (tasmanianmountainwaters.com.au, 2018). The USP of their product is the natural goodness of the water that is preserved through their efficient collection and preservation techniques (Spinks, 2017). The company aims to provide the customers the best quality product with its natural goodness intact. The water also provides a ‘well balanced’ source of minerals such as magnesium, calcium, phosphorus and other important minerals and has the ideal pH value of 7.6 to 7.8, making it healthy and perfect for consumption. The product is sold in 10 litre, 5 litre, 750 ml, and 350 ml containers (such as casks and bottles) (tasmanianmountainwaters.com.au, 2018). In 2015, the company invested about 1 million USD in the Burnie water bottling plant to meet the export deal with China (Blucher, 2015; abc.net.au, 2015).

China is considered to be the biggest markets for bottled water across the world. The demand of bottled water grew enormously from the year 2000 to 2014, causing a market growth from 1 billion USD to 14 billion USD (John, 2018). Studies have further anticipated that the annual rate of growth in the market can increase by 5% to 12% by the year 2025. This tremendous increase in demand for bottled water have been supported by poor quality of tap water, increase in health awareness among the consumers, improvement in the levels of income and increase in international tourism in the country. By 2013, the market demand for bottled water in China, surpassed that of USA, growing from 19 billion litres in 2010 to 37 billion litres in 2015 and is expected to grow to 49 million tonnes by 2020. This shows that China is the biggest market for bottled water. Currently, companies such as Kang Shi Fu, Nong Fu Spring and Wahala are the leaders in the bottled water market in China (openpr.com, 2018; Avanti, 2018). Studies have also shown that the demand for premium quality bottled water also has a very high demand in China, especially among the upper and middle class families with rapidly growing per capita income (Allan, 2018; Wan, 2018; Liangyu, 2018).

Tasmanian Mountain Waters plans to market its packaged premium drinking water to China, bringing in the freshness and natural goodness of the waters from the freshwater springs and waterfalls in Tasmania (asmanianmountainwaters.com.au, 2018). The aim of this study is to analyse the various factors that that impact the marketing campaign.

Discussion (economic/financial, political/legal, social/cultural, technological factors that can affect the marketing campaign in China): 

Various environmental factors such as economic/financial, political/legal, social/cultural and technological factors can impact the marketing campaign for Tasmanian Mountain Waters in China. Discussed below are these factors and how it can impact the marketing campaign in the country:

According to  Castaño et al. (2015), understanding the economic and financial factors is one of the most important aspects in any strategic marketing approach, as it helps to assess the economic/financial risks in the market as well as understand the sustainability of the market and thus the future growth opportunities, especially for foreign Markets (Grewal et al., 2018). It is vital therefore to properly assess the economic/financial factors that are at play in the Chinese market for bottled water.

Political/Legal Factors

Currently, China has a multi-billion dollar market for bottled water, with an expected annual growth rate of up to 15% by 2025. This has been significantly supported by a rapid economic growth from 6.7% of GDP in 2016 to 6.9% of GDP by 2017. The per capita GDP also increased from 7,124 (as of 2013) to 8,806 (as of 2017). Similarly, rates of unemployment have also reduced from 4.1 (as of 2013) to 3.9 (as of 2017) (state.gov, 2017). The rapid economic growth has earned China the second largest economy in the world with a nominal GDP of 9.2 trillion USD (indianexpress.com, 2018; Low, 2018). This has also helped in a significant improvement in the buying powers of the Chinese citizens as they can opt for imported and premium products (Popescu & Ciurlau, 2016). The growth in the demand for packaged water is especially significant for ‘premium and sparking water’ which has a 7% share in the market which amounts to approximately 1 billion USD market for premium or sparking water (Wan, 2018). Due to the significant growth in domestic demands for products, there is a good opportunity for Tasmania Mountain Waters to provide quality packaged drinking water.

The economic growth of China can be explained by the Growth of Human Capital and increase in the number of skilled workers which have helped the country to increase their GDP and establish them at the forefront of global economy (Li et al., 2017). According to Fang and Wolski (2016) and Raineri (2017), this development is one of the biggest factors contributing to an increase in the buying power of Chinese citizens. This economic growth can be a significant strength for the marketing campaign for Tasmanian Mountain Water.

The political framework of China has more restrictive policies for foreign investments compared to its major trade partners such as USA (Handley & Limão, 2017). Even though China is one of the leading destinations for investments from foreign countries, several sectors of the country are closed from foreign investment. The practice of investment approval acts to shield state owned enterprises and companies belonging to china from competition from international players (Feng et al., 2017; Chow & Schoenbaum, 2017). Moreover, the country also has selective regulatory enforcement that leads to discrimination, barriers towards licensing and lacks independent judiciary as well as an ineffective Intellectual Property Rights (IPR) implementation (state.gov, 2018; Alessandria et al., 2017). It has been pointed out by Kennedy and Johnson (2016) and Aglietta and Bai (2016) that the 13^th Five Year Plan of China can be discriminatory against international companies operating in China and favouring the local companies and products. Such policies have been actively protested against by various American companies and industries that struggle to compete with the local companies due to the restrictive policies (Alessandria et al., 2017). This poses a significant challenge for Tasmanian Mountain Waters to succeed in China overcome competition from its key (local) competitors: Kang Shi Fu, Nong Fu Spring and Wahala who are currently the market leaders in packaged drinking water (Wan, 2018). However, the 2016 pledge by the Chinese leadership have assured the international companies of an improved access towards pilot markets and development of a Free Trade Zone to attract foreign investment (Popescu & Ciurlau, 2016). This can be helpful for Tasmanian Mountain Waters to be capturing the niche market for ‘premium’ and ‘sparkling’ mineral water in China. Moreover, the Bilateral Investment Agreement between China and Australia can also help to increase investments in the Chinese market in order to increase the market share for Tasmanian Mountain Waters in the future.

Social/Cultural Factors

The legal regulatory practice within China has also been criticized for maintaining the discriminatory practices against foreign companies, stating that the legal system lacks transparency, are inconsistent and are enforced arbitrarily which causes major problems for international companies doing business in China. Additionally, according to Alessandria et al., (2017), such practices are unlikely to change in the next 3 years. Such a legal and political environment can be a disadvantage for Tasmanian Mountain Waters to achieve a significant market capture and compete with the market leaders in China that is favoured by the national policies and legislature for being locally owned.

National Culture can be analysed using Hofstede Dimensions of national Culture that studies culture of a country based on the dimensions of ‘Power Distance Index’, ‘Individualism Vs. Collectivism’, ‘Masculinity Vs. Feminity’, ‘Uncertainty Avoidance Index’, ‘Long Term Orientation Vs. Short Term Normative Orientation’ and ‘Indulgence Vs. Restraint’ (Hur et al., 2015). The Hofstede Insights website shows that China scores 80 in Power Distance, 20 in Individualism, 66 in Masculinity, 30 in Uncertainty Avoidance, 87 in Long Term Orientation and 24 in Indulgence. These values show that the Chinese culture follows a hierarchical order; values a collectivist ideology; show preference towards achievements, heroism and assertiveness and material rewards of success; are relaxed in their attitude where practice are the main cornerstones of principles; show more openness towards the future and shows some restraint in their behaviour (hofstede-insights.com, 2018). Diagram below shows the Hofstede Cultural Dimensions score for China:

Figure: Hofstede Dimensions for China (source: hofstede-insights.com, 2018)

Factors such as a collectivistic culture focus on achievements and assertiveness towards rewards, relaxed attitude and openness towards the future can support the success of the marketing campaign. The collective culture can help the campaign to reach a wider customer base by targeting fewer customer profiles. The openness towards future can be helpful to increase openness towards a foreign company, while preference to material rewards can attract the customers to premium quality and exotic value of the product, especially among the middle and upper class families (Hur et al., 2015). By properly capitalising on such factors, the marketing campaign for Tasmanian Mountain Waters can achieve success in China.

Relation to nature and harnessing the potency of nature have also played a significant part in Chinese culture with the rich and effluent showing a high preference towards everything that is natural and exotic. The premium quality of the packaged water of Tasmanian Mountain waters as well as the exotic nature of its origin can be a significant attraction for the Chinese consumer market and an increasing focus of Chinese consumers on quality of product (Gruber, 2016). However the hierarchical structure of the culture can be one challenge for the company, as it can lead to more power for older competitors in the market and make the competition steeper for Tasmanian Mountain Waters (Hur et al., 2015).

Technology is rapidly growing in China with the Chinese Industries being at the helm of the technological frontiers, paving the way for the rest of the world. With a growth in various technological innovations, companies in China have significantly grown over the decades through the utilization of technologies (Bhattacharya et al., 2015). The growth has been significantly contributed by a growth in expertise, talent and economic capabilities of China. More and more Chinese citizens are now technologically competent and various technologies have permeated into their day to day lives (Mao & Hale, 2015). The increased usage of technology by Chinese people and the presence of a large number of individuals with expertise in technology and technically skilled professionals have also allowed various international giants such as Apple Inc. And Microsoft to develop their operational and manufacturing base in China (Etzioni, 2018)

Technological Factors

The higher general competency of the public with the usage of technology can help Tasmanian Mountain Waters to use technology in its marketing campaign. According to Bhattacharya et al. (2015), usage of technology can help companies to keep pace with the dynamic market and respond effectively to changes in the market through effective collection and analysis of market data that can provide a real-time and realistic understanding of the market dynamics and market demands and thus address them more effectively. Social Media platforms can be helpful to reach a larger customer base through the virtual media and online marketing campaigns. Technology can also be used to gather feedbacks from the customers and analyse their expectations that can be used in the product development, while effective data analysis tools can be used to forecast possible market changes and fluctuations and thus help the company to react to them more effectively (Tuten & Solomon, 2017).

Technology can also help to ensure more success to the marketing campaign by not only helping to reach a wider audience but also by improving the accessibility of the company’s website through various platforms such as computers and hand help devices (Alford & Page, 2015). Popular online games (such as Player Unknown’s Battle Grounds or PuBG and Fortnite) which have a high number of online users can also be used as an advertisement and marketing platform for the product (Esq & Smith, 2017).

Conclusion 

Tasmanian Mountain Water is an Australian company that packages and distributes mineral water and is famous for the natural freshwater spring water, with natural minerals and freshness of nature. Its quality sets it apart from its rival and the company plans to extend its operations to China. China have been the most steadily growing market for packaged drinking water due to the poor water quality from public water supplies as well as due to an economic growth and health awareness among Chinese people. This has allowed China to become the biggest market for packaged drinking water with a consumption of billions of liters every year.  There is a significant market segment for ‘premium’ and ‘sparking’ water in China that can be capitalized by Tasmanian Mountain Water. Moreover, the increased preference for quality and exotic value of products among the middle and upper class provides an ideal niche for Tasmanian Mountain Water Products who are well known for the quality and exotic value of their products. However, the company needs to be prepared for challenges such as competition from other Chinese companies and biased and poor implementation of trade policies.

In order to ensure success, Tasmanian Mountain Waters can implement the following recommendations to capitalise on the opportunities:

• Focusing the marketing campaign towards the middle and upper class consumers with higher buying power: With an increase in the buying power among the middle and upper classes, demand for quality of product have increased and thus are ideal target consumers for the product.
• Focusing on the exotic value of the product due to its source to attract more customers: Increased spending power have also increased preference towards the exotic values of the product. Focusing on the exotic value of Tasmanian Mountain Waters can help to attract more band conscious consumers.
• Highlighting the health benefits of the product: The average Chinese consumers show more consciousness towards health and healthy products. They prefer food and beverages that are healthy and thus focusing on the health advantages of the Tasmanian Mountain Waters can be a useful strategy to attract them
• Streamlining to products towards ‘premium’ and ‘sparking’ water: The ‘sparking water’ segment of the Chinese packaged water market is worth about 1 billion and has very little competition. Streamlining the products to ‘sparking water’ can help to tap into the niche market and ensure market success.
• Using social media for online campaigns on Facebook, Twitter, and Instagram: The number of users of social media has increased in China over the years and thus can help the company to reach to a large crowd of people.
• Utilizing online platforms such as YouTube: YouTube videos and YouTube bloggers have a very high number of followers online. Such a platform can be therefore used to reach the crowd on online you tubers.
• Showing involvement in CSR activities to highlight that the company cares for the health and wellbeing of the communities: Through CSR activities, Tasmanian Mountains Water can improve their brand image and develop brand loyalty.
• Utilizing sport events and music concerts for promotions and advertisement campaigns for the products: China hosts several sports and music events every year. These events can be used for mass campaigns for the product.
• Developing tie-ups with Chinese travel and tourism companies and providing travelers complementary products: Complementary services from Tasmanian Mountains Water can help to increase brand awareness especially among the tourists and travelers.

(Grewal et al., 2018; )

Strategies that Tasmanian Mountains Water can use to overcome the threats from the Chinese market include:

• Developing a product that has a superior quality compared to its competitors: Better quality product can help Tasmanian Mountains Water to get an edge over the competitors.
• Hiring International Celebrities famous in China for the advertisements and gain competitive advantages: Celebrities can help to increase brand recognition in the market and thus capture a larger market share.

(Popescu & Ciurlau, 2016; Raineri, 2017)

References:

abc.net.au. (2015). Tasmanian Mountain Water’s Director Jason Jones explains the production growth needed to meet the huge new demand from China. Retrieved from https://www.abc.net.au/news/rural/2015-09-09/tasmania-mountain-water-exports-china-infant-milk-formula/6761918

Aglietta, M., & Bai, G. (2016). China’s 13th five-year plan. In pursuit of a “moderately prosperous society” (No. 2016-12). CEPII research center.

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